President Obama’s Speech Before the Business Council

President Obama made a speech before the Business Council last Tuesday, making his pitch for financial regulation reform. One of the President’s key points was the importance of building and maintaining a working partnership between business and government in order to stabilize the economy. “I believe the success of the American economy depends not on the efforts of government, but on the innovation and enterprise of American businesses. And it will be American businesses that will help us emerge from this period of economic crisis and economic turmoil.” In discussing government’s role in rebuilding our economy, the President made clear that he believes in free markets. The President spoke of the importance of “markets that are free and open to all who are willing to work hard”. But, he continued, “that doesn’t relieve government of its responsibility to help foster sustained economic growth and to ensure that our markets are functioning freely.”

President Obama spoke of the importance of governmental rulemaking for a well-functioning market. Rules that will help to prevent dishonest market participants from “gaming the system” are essential. But the President’s speech, and the discourse about financial reform in general, fail to emphasize a change in business culture that would make ethics central to any discussion about business and finance. In other words, elected officials, regulators and business leaders should focus on the fundamental principles of responsible corporate leadership – not just the rules. Individuals can always get around the rules. What we need is a change in the business climate itself.