December 12, 2009
Dr. Chinmoy Ghosh, Professor and Head of the Department of Finance, has been appointed University Chapter Director of the Global Association of Risk Professionals (GARP). The University of Connecticut’s School of Business is the latest addition to GARP’s University Chapter Program.
November 24, 2009
The University of Connecticut School of Business is proud to announce the Master of Science in Financial Risk Management (MSFRM) Program located at the School’s Stamford, CT campus. The MSFRM Program is designed for finance professionals involved in creating economic value by using financial instruments.The Master of Science in Financial Risk Management is designed for business professionals who want to enhance their careers by fully understanding how to identify and manage various types of financial risk. Learn More.
August 26, 2009
This article first appeared in the UConn Business magazine, Volume 1, Issue 1 (Summer 2009)
“Creativity is in our DNA at Walmart,” noted Bill Simon ’81, ’88 MBA, a distinguished UConn School of Business alum. Simon, Executive Vice President and Chief Operating Officer of Wal-Mart US., and his colleague, Hank Mullany, President of Wal-Mart Northeast, were addressing questions from Full-Time MBA students at a forum about organizational transformation on Tuesday, April 21st.
After the forum, they opened the floor to a question and answer session regarding career management, a topic of particular importance to students in this economic climate. The forum held at UConn was focused on the organizational transformation that Walmart Executives Address Organizational Transformation and Careers with MBA Students Walmart has undergone in the past few years and career advancement.
Mr. Simon started with a quote from Walmart CEO, Lee Scott, “To stay out in front of change, we must make unique contributions to the community.” Walmart does this through a strong strategy around climate, waste and products. Stores are becoming more energy efficient through solar power and renewable energy, creating zero waste and selling products that sustain resources and the environment. This is a two-fold effort: it gives Walmart a great image, but it also saves the company millions of dollars a year. Smaller packing allows the company to save waste and lowers the cost of operation. Aerodynamic trucks save 32 million gallons of fuel each year.
Walmart’s corporate motto “Save Money. Live Better.” follows this notion. Mr. Simon is proud to be a Walmart employee; he believes that Walmart’s position as an established leader in the retail segment is driven by its ability to save consumers money and provide them with fast and friendly stores. Simon also noted that Walmart is adept at executing new ideas by staying on the cutting edge; he’s never experienced a company that does it better.
In the career session, Simon and Mullany spoke to MBA students about the skills and traits that are needed to excel in today’s business world. Students should leave their MBA program with a willingness to work hard. Mullany notes that having a “fire in your belly” that will fuel work ethic is among one of the most important skills. In addition, strong communication, leadership and analytical skills will contribute to success in the business world.
Today’s business world is competitive and Mr. Simon and Mr. Mullany reminded all students to be proactive, not reactive. A new employee can make a difference early on and has the opportunity to shine when first starting a new job. In order to be successful in finding the right job, Mr. Simon reminded all students not to take a job simply because the pay seems right. He asked the students to always remember three basic principles: ask yourself what you get from the position, what you give to the position/company and what is in it for you. Mr. Mullany followed with stressing the importance of having a vision of what you want out of a career. The skills Mr. Simon learned at UConn helped to prepare him for his career trajectory.
Mr. Simon is currently Executive Vice President and Chief Operating Officer of WalMart US. He is responsible for the retailer’s U.S. operations, covering more than 3,600 stores, logistics, asset protection, transportation and store innovation. The Walmart U.S. retail units include Discount stores, Supercenters, Marketsides and Neighborhood Markets. He was promoted to his current position in 2007. Mr. Simon was previously EVP of Professional Services and New Business Development where he managed Pharmacy, Optical, Tire and Lube Express, Photo, and Connection Centers. Mr. Simon also led the team that created and launched Walmart’s $4 generic prescription program.
This article first appeared in the UConn Business magazine, Volume 1, Issue 1 (Summer 2009)
The Stamford UConn Chapter of the National Association of Women MBA (NAWMBA) hosted the first meeting of the year on Wednesday, April 8 at the UConn Stamford campus.
The meeting’s theme was “Leadership: Today and Tomorrow” featuring Irina Tsikhelashvili Moore ‘04 MBA, UConn MBA graduate featured in the UConn 40 under 40 awards.
Moore participated in edgelab and received the GE Edison Award for her significant contributions to GE. Today, she is the vice president of risk management for GE Money, the corporation’s consumer and small financial services unit.
Moore discussed issues of women in leadership in corporate America and how she found success in overcoming obstacles. She reinforced that no matter if you are male or female, to be accepted as a true leader you must be an expert in the field you are leading and treat all employees with equal respect. She sets very high expectations for her team and works side by side with them to achieve the set goals.
The meeting also included discussions about women in leadership roles. The event was attended by business alums, current undergraduate students, faculty, and MBA students.
This article first appeared in the UConn Business magazine, Volume 1, Issue 1 (Summer 2009)
Denis J. Nayden ’76, ’77 MBA, was invited as a guest speaker at a special forum on the global economic crisis. Held at the UConn Storrs Campus on Wednesday, February 11th, this informative and provacative discussion drew an audience of over 100 students, faculty and staff. Continue Reading
This article first appeared in the UConn Business magazine, Volume 1, Issue 1 (Summer 2009)
John Y. Kim ’87 MBA is President and Chief Executive Officer of New York Life Investment Management, LLC (NYLIM). Mr. Kim has an impressive 25-year history as a business executive in the investment management and retirement plan industries. In recognition of Mr. Kim’s exceptional professional success and contributions to the community, the UConn School of Business inducted him into its Hall of Fame in 2001. In 2006, Mr. Kim received the prestigious Pinnacle Award through the Asian American Business Development Center’s Outstanding 50 Asian Americans in Business Award program.
On May 10, 2009, John Y. Kim ’87 MBA, distinguished UConn School of Business alum and Chief Executive Officer of New York Life Investment Management, LLC (NYLIM), addressed an audience of over 500 graduating seniors, their families, and University faculty and staff at the Gampel Pavilion at the UConn campus in Storrs, CT.
Kim, a self-described “recession graduate” of the 1980s, notes that like today’s graduates, he “came into the job market just as this country was experiencing its last big recession” and that despite the climate then and now, he truly believes that “the future holds tremendous opportunities.” He offered the graduates some words of advice – “continue to learn, work hard and be passionate in everything you do.”
Kim also noted that “hard work is perhaps not a sufficient criterion for success but certainly a necessary one,” both to become a successful CEO as well as giving back through philanthropic activities. On this note, Kim spoke to the hard work and value of the UConn Foundation Board of Directors where he has just completed his 10-year term limit. The UConn Foundation is a philanthropic, tax-exempt corporation that operates exclusively to promote the educational, scientific, cultural, and recreational objectives of the University of Connecticut.
Kim also spoke to the importance of seeking a life of continuing education. Addressing the graduates, he charged them to “develop and secure passion in your life starting with your career.” Happiness, productivity and pride in oneself as well as the institutions and people around us go hand in hand, he affirmed.
This article first appeared in the UConn Business magazine, Volume 1, Issue 1 (Summer 2009)
When Selma Cagatay-Searfoss ’94 (SSW) sought to mark the passing of her husband, David Searfoss ’76 MBA, she and her children created an endowment in David’s honor to support the School of Business’s Student Managed Investment Fund. “With this fund, we hope to encourage students’ education, but also to promote David’s legacy,” says Selma. “I think this fund really captures his vision and spirit. The whole family is thrilled with the establishment of the fund and with its current success.”
One of the School of Business’s most popular educational programs, the Student Managed Fund, established in 1999, offers students a rich experiential learning immersion in stock selection, trade execution, and portfolio management. Funded by the UConn Foundation in cooperation with the School of Business, the Department of Finance, alumni and private donors, the fund gives students a unique opportunity to apply classroom concepts to real-life investing.
Investing in the financial markets was a passion David Searfoss developed early in life. After starting his career as a Certified Public Accountant and eventual Audit Manager with Price Waterhouse in Hartford, he then became the Senior Vice President, Chief Financial Officer and Treasurer of the Orion Group. After serving as Vice President and Controller of the Orion Capital Corp, he became Executive Vice President and Chief Financial Officer of the Phoenix Home Life Mutual Insurance Company. David was also a Certified Financial Analyst, and formed Sears Investment Management, LLC a registered advisory firm.
Selma’s and David’s son Cengiz Searfoss, a managing director at DCS Capital, has taken on a more instrumental role in overseeing the Student Managed Fund. He greatly appreciates how experiential learning enables School of Business students to think more critically about their investment selections and the timing with respect to those decisions. “That type of risk awareness is something that doesn’t come instinctively until you start to manage money. These students gain
a good understanding of what they’re getting into and why. They really understand the backdrop, the industry, and the fundamentals; their in-depth understanding of decision-making is a real testament to the students and to UConn,” he says.
Both Selma and Cengiz agree that David would be especially proud of the character building that students experience as a result of their involvement with the Student Managed Fund. “Teaching students how to maintain the highest levels of integrity while maximizing returns is so important, so teaching students the importance of character building and business acumen is what would make David very happy,” Selma emphasizes. If any of the student’s investments go bad, they know they must be accountable to the board, and, as Cengiz shares, “that’s part of the accountability process.”
Selma, a native of Turkey, agrees that the family’s support of the Student Managed Fund is a particularly fitting way to celebrate David’s legacy. “David always mentored young people, and he was an incredible teacher. He was such a gentle soul, in that sense. He demanded and expected more, but he was a great teacher and loved sharing his knowledge. He expected young people to strive and excel,” she says.
David’s love for discussion and ideas was infectious. His niece, Shebna Olsen, a wealth management professional with HSBC Securities, indicated that David “always talked to me like I was a peer. He constantly shared things with me; he was the best mentor I could ask for. Although he was a CFO, he would give all his knowledge away, if you were willing to talk with him.” As a son, brother, husband, father, uncle, and grandfather, David always encouraged those he loved to pay close attention to the world around them. He knew that understanding the broader world not only helped others make more informed financial decisions, but also helped one appreciate diversity and difference.
The Searfoss family looks forward to making the Student Managed Fund even stronger in the future. For example, both Cengiz and Shebna have expressed interest in strengthening the semester-long mentoring relationships between board members and students. Selma agrees that this mentoring reflects David’s spirit. “It’s important that we make sure students think about investments and finance with the highest levels of integrity, especially given the financial scandals of late. David had such incredible integrity, and that integrity is so important for our future business leaders to pass down to the next generation of investors,” she says.
In honoring her husband’s legacy, Selma hopes to set an example for future UConn alumni. “Giving to UConn is gratifying for us. I take it very seriously, for I feel it is our civic duty. Graduates gain so much, and it’s important for them to then give back. Our future generations need to see modeled for them the importance of giving back. I’m so delighted we are giving back to UConn. I enjoy passing the baton to young ones, and we all have to somehow be reaching out to the world.”
Cengiz also takes great pride in carrying out his father’s legacy. “I think my father would be over the moon with what has been accomplished with the Student Managed Fund. I think this program reflects so many of the values that he shared.
Investing was a passion that my father had, and I share that passion. With the Student Managed Fund, I feel that the students, the board members, and UConn’s faculty are all really rowing in the same direction, so to speak. It’s important to encourage these young minds to continue to think things through, to keep asking questions.”
This article first appeared in the UConn Business magazine, Volume 1, Issue 1 (Summer 2009)
On Friday, May 1, 2009, the UConn School of Business inducted five alumni with outstanding achievements in business into the 16th Annual Hall of Fame Celebration in Stamford, Connecticut. The School’s Hall of Fame was established in 1993 to recognize the outstanding business and community achievements of its alumni and students. Since then, over 100 alumni have been inducted.
Alumni Inductees
Jonathan “Jon” Beyman ’76 is Managing Director, and serves as the Global Head of Operations and Technology of
Citigroup’s Global Institutional Bank, since joining the Bank in August of 2008. Jon is a member of the board of DonorsChoose.org, an online non-profit that is dedicated to addressing the scarcity and inequitable distribution of learning
materials in our public schools through Citizen Philanthropy.
John Cutler ’66 is a founding partner of Beers + Cutler, a leading accounting and consulting firm located in Washington, DC. John has enjoyed and taken pride in serving in board and leadership roles at UConn. He served on the Board of Advisors for the UConn School of Business and is now a member of the UConn Foundation where he serves as a chairman of the audit committee.
Pat Friar ’80 recently retired from GE with over 26 years of Finance, Human Resources and Executive Development
experience. She was the Senior Vice President of Human Resources for GE’s Consumer Finance. Pat is an active member
of the School of Business Leadership Cabinet and presents in Executive MBA programs in both Hartford and Stamford.
She’s equally active in her community as an executive coach and a member of the National Charity League.
Tim Friar ’80, ’83 MBA was most recently the President and CEO of the Make-A-Wish Foundation of Connecticut, Inc.,
a not for profit organization that grants the wishes of children with life-threatening medical conditions to enrich the human experience with hope, strength and joy. Prior to joining the foundation, Tim had a long-standing relationship with Make-A-Wish originally as a volunteer and then subsequently as a two-term board member. Tim is an active member of the School of Business Leadership Cabinet.
Walter C. Richter ’81, ’88 MBA is a Vice Chairman of Deloitte LLP. In this role, Walt leads the Office of the CEO
program and oversees interaction with Deloitte’s largest asset clients. Walt is also the audit committee chairman and a
board member of the James Beard Foundation.
Emeritus Faculty Award
Dr. Herbert Spirer longed to become an educator after he learned and taught Morse code as an adolescent. After his service in the Pacific Theater in the U.S. Navy during World War II and after earning his Engineering degree, Herb worked for 14 years in industry, first at the General Electric Electronics Laboratory and later in positions of increasing breadth and responsibility at other research companies. Herb pursued his dream and came to UConn as a lecturer in 1966. In 1970, Herb was promoted to assistant professor, and in 1975 he rose to the rank of full professor and continued teaching at the UConn Stamford Campus for a total of 25 years of dedicated service. Herb’s tenure also included service as the director of the MBA Program.
Outstanding Strategic Partner Award
Northeast Utilities’ vision for “energy, growth and leadership” and “the energy to make a difference” dovetails with the School of Business’ goals to provide world-class training to the next generation of business leaders as well as groundbreaking research and innovative solutions for industry, while continuing to grow and raise the bar for excellence. The UConn School of Business salutes Northeast Utilities for its dedication to improving communities in our greater Connecticut, Massachusetts and New Hampshire region and its generous support of the School of Business and the University of Connecticut. Jean Lavecchia ’81 MBA accepted the Outstanding Strategic Partner Award on behalf of Northeast Utilities.
Student Fellows
Gregory Carbonella, Marisa Coords, David Macionus, Kyle McLaughlin, and Mona Mitri from the Undergraduate Program; Katherine Avery, Full-Time MBA Program; Marisol Maull, Hartford EMBA Program; Nicholas Macsata, Hartford Part-Time MBA Program, Anthony Cannella, Stamford Part-Time MBA Program;Sungmee Choi, Ph.D., Waterbury Part-Time MBA Program; Ann Kummer,MS in Accounting Program; and Ciaran Heavey, Ph.D. Program.
This article first appeared in the UConn Business magazine, Volume 1, Issue 1 (Summer 2009)
P. Christopher Earley is former Dean and Cycle and Carriage Chair at the Business School, National University of Singapore. Prior to that Professor Earley was Chair and Professor of Organisational Behaviour at the London Business School. He has held academic chairs at Nanyang Business School and Indiana University. He is currently the Dean of the School of Business at the University of Connecticut. Professor Earley’s interests include cross-cultural and international aspects of organizations such as the dynamics of multinational teams, negotiation and conflict, the role of face in organizations, and motivation across cultures. Professor Earley is the author of ten books and numerous articles and book chapters, and his recent publications include Cultural Intelligence: Individual Interactions Across Cultures(with Ang Soon), Multinational Work Teams: A New Perspective (with Cristina Gibson), Culture, Self-identity, and Work and The Transplanted Executive: Managing in Different Cultures (both with Miriam Erez), Face, Harmony, and Social Structure: An Analysis of Behavior in Organizations, and Creating Hybrid Team Cultures: An Empirical Test of International Team Functioning (with E. Mosakowski, Academy of Management Journal). He has taught executives and consulted for companies such asNestle, Cisco Systems, Samsung, Unilever, British Aerospace, Mercury Asset Management, Eli Lilly Pharmaceuticals among others in England, France, Germany, Hong Kong, Israel, People’s Republic of China, Singapore, South Korea, and Thailand, among others.
Q: Acclimating to a new family, so to speak, always comes with its special challenges and welcome surprises. Please share with us some of your highlights as you’ve adjusted to your new position as UConn’s School of Business Dean.
A: One of the key things I’ve been impressed by is how the faculty and staff have come together, especially under challenging circumstances. We’ve implemented many changes: changes in procedures, changes in course loads, changes in the way we do business. Throughout all these changes, the faculty and staff have been amazingly resilient and flexible. As you know, when you enter into a new family, there’s some level of disruption. However, I’ve been very impressed with the ways that our UConn faculty and staff have embraced these times. People have been asking in a much more iterative fashion, “What are the ways we do things? What are some better ways to accomplish these things?”
Q: What are some of your particular goals to ensure that UConn undergraduates are prepared to excel in the 21st century workplace?
A: Well, first and foremost, we’re trying to make experiential learning, one of the three main pillars of our academic plan, more widely available to the undergraduate students. Experiential learning is already extensively available to graduate students, but we’re trying to make sure that undergraduates have more opportunities along these lines, so that these students are matching their real-world experiences with their academic preparation. When students have blended experiences like these, then they have not only a solid academic background, but also practical firsthand experiences and knowledge as well. Secondly, we’re working on ways to strengthen undergraduates’ global exposure. Of course, I have a passion for this emphasis, because of my own background, experiences, research, and consulting. I think for the students, the more we can encourage them to have opportunities to travel abroad, the broader their world vision will become, and the more likely they will view their own part of the world in a much more sophisticated fashion.
Q: Of course, we all know that globalization is impacting all business schools’ curriculum and preparation of future business leaders. In what ways are UConn’s programs responding to these challenges and developing students’ cultural intelligence?
A: When we think about “cultural intelligence,” we are really talking about a multi-faceted approach to intelligence, for there are really different aspects of intelligence. And one of those is “practical” intelligence, and our programs place a very strong emphasis on practical intelligence. I’ve found that that many companies and industry leaders want individuals who have practical business sense, or, in other words, common sense situated within a business context. So I think it’s critical to step back, look at things more holistically, and find ways to integrate classroom learning with real-world contexts. From a globalization perspective, we’ve been working on developing more of an international network. That’s a really critical part of our mission as we move forward. Since I’ve come on board, we’ve actually doubled the number of international partnerships we have. This very big priority goes both ways: it’s not just sending our students abroad, but it’s also having a richer mix of international students at our own university. We’re partnering now with some very prestigious universities in the Middle East, in Asia, in Europe, and this is a very strong emphasis for me, because I think one of the ways our graduates get known is by having our university well-known.
Q: Among the myriad of changes we’re experiencing today, certainly the process of earning a college degree is changing as well. More potential students are looking for flexibility and responsiveness—in both course offerings and delivery methods. How is the School of Business responding?
A: Among other things, we’re introducing new programs. We’ve created—and are currently in the process of seeking state-level approval for—a master’s degree in financial risk management. We saw—and responded to—a strong demand for such a program from the business community. We want to roll out this program to improve our students’ employability, and risk management is a key issue during this economic crisis. By responding to the business
community’s needs during these times, we believe we’re going to be at the very forefront of a very different business program. Secondly, we’re trying to offer more general business background opportunities for students at our regional campuses. We’re looking to offer a general business degree, for instance, at all of our regional campuses, and we hope we’ll be able to launch these programs by 2010 or 2011. We want to offer these types of programs for students who don’t
necessarily have the opportunity to take classes in Storrs and who wish for a more generalist background in business.
We’re also looking at different venues and styles for classroom instruction. For example, we want to roll out a variety of different programs—both undergraduate and graduate—for online learning opportunities. Therefore, when people are in nontraditional roles, they can have the opportunity to m triculate at the university. Recently, I met with a student at one of our international events who’s in the military and was deployed in Iraq for the better part of last year. While he was in Iraq, he was taking online courses from UConn. He ended up taking something like 4-5 classes. If it weren’t for these online opportunities, he wouldn’t have been able to keep up that type of connection. He said that he found the experience of working with our online community and our specific style of online education very, very satisfying. We’ve also developed what we refer to as ABCs, or Advanced Business Certificates. The certificates are all comprised of four related courses in a specific area of study. These certificates allow students to specialize in a particular sub-area within their education, without necessarily committing to a full concentration, which would require completing many more courses.
That way, students can develop additional expertise, with which they can make themselves more marketable. We’re offering these certificate programs to students who aren’t necessarily full-time or even part-time MBA students. As long
as students qualify academically to our standards, these students cancomplete a series of linked courses to acquire some specialized knowledge that would benefit them and their organizations.
Q: With the current economic downturn, many students and families are naturally concerned about employment prospects upon graduation. However, these students and families also appreciate the first-class education that UConn provides. What advice and wisdom do you have for those who share these concerns?
A: I think it’s important for students to think outside the box with respect to traditional entry-level job placements. While a finance major, for example, may have traditionally wanted to go to Wall Street. I’m encouraging this type of student to consider opportunities at small-to-medium-sized banks in Connecticut. Many of these banks are highly reputable and are financially solid, and students will be able to acquire really good experience that they can then carry with them for the
rest of their career. These positions may not pay as high as the prestigious Wall Street firms, but they do provide security and a wonderful opportunity for graduates to learn new things and practice their craft. Also, I encourage students to think about pairing their different skill sets. For example, if a student is a finance major, then that student mightconsider pairing that background with information technology or management strategy. Students who do so will be able to differentiate themselves more from students who would be, say, finance majors without any developed knowledge in these other areas.
Q: The current economic climate has also encouraged many of our alumni—especially small business owners– to revisit their own business models and best practices. In what ways can UConn respond to these individuals’ needs?
A: Certainly, our Innovation Accelerator is a more formal mechanism specifically geared to help people launch new businesses. Also, the Management department’s Wolff Entrepreneurship program offers numerous opportunities for proactive engagement. More broadly, I encourage our alumni to see us as a resource for them. As a resource, we offer them opportunities to work with not only our faculty, but also our students who are eager to consult with them
and help them think through ways to refocus their business strategies and models. In a sense, the more our alumni participate and get involved with our students, both undergraduate and MBA, the more I think our alumni will appreciate that these students are excellent resources for them to draw upon. And the relationship is mutual: students will be able to assist alumni, just as the alumni benefit our students by creating opportunities for them.
Q: We’re blessed to have a dedicated, responsive alumni network; many of these alumni have graciously given to the School to support numerous programmatic efforts and scholarships. Please share with us how central these alumni efforts are to helping you and the rest of the UConn faculty realize goals that benefit students.
A: Our alumni network is absolutely critical in so many ways. For example, they bring us opportunities for executive education; they’ll often nominate UConn as one of the possible providers of executive education to their companies. Further, alumni are critical for student placement and for student internships. And, quite frankly, our alumni are very critical for helping us keep a finger on the pulse of what is really going on in the marketplace. For example, the new graduate program we developed in Financial Risk Management was strongly endorsed and recommended by our senior alumni who are leaders in the financial industry. So developing new programs is really an iterative process, in which our alumni help inform us of what their needs are in the business community, and we in turn then take those ideas to our various departments, so we may design courses that address those needs, and then share our proposed offerings with alumni to receive feedback. Our alumni are especially key to making others aware of the uniqueness of UConn’s School of Business. For example, I’ll often have Deans and Associate Deans from other business schools come to visit us, and after they get a briefing on our Learning Accelerators, they walk away stating that these programs are things they wish they had in their own institutions, for they’ve never seen something so sophisticated before. These unique learning opportunities that help define our programs have helped our School of Business create partnerships that we couldn’t have created otherwise. We’re able to partner with very prestigious schools internationally that see the value of our unique offerings.
This article first appeared in the UConn Business magazine, Volume 1, Issue 1 (Summer 2009)
Philip McDonald ’09 MBA earned his B.S. in International Finance and Commerce at Georgetown University and also studied at l’Institut d’Etudes Politiques in Strasbourg, France. He has held investment management positions with Prudential Capital Group in Chicago and London, and has been a CFA Charter Holder since 2003. Phil earned his MBA with concentrations in finance and venture consulting and was also lead Manager of Uconn’s MBA Student Managed Fund. He is currently working for The Hartford’s Business Technology Consulting group as a Senior Consultant.
In order to put this recession into perspective, loose comparisons have been made to historic crises, especially to The Great Depression. In comparison to previous downturns, this event provides not only an economic education but also an unprecedented opportunity to implement lasting reforms. We have learned the interdependence of real estate, capital markets, financial services, availability of credit, interest rates, unemployment, and general price levels during the last 24 months. We also now have the opportunity to identify ex ante individual behavior and systemic weaknesses that contributed to our current state of affairs. This information should be used to modify both.
However, change is neither universally positive nor successful in meeting its goal. In attempting to expedite a recovery, we risk forcing the metaphoric pendulum to swing too far from the exuberant excess of our recent past toward the asphyxiating effects of fearful retrenchment and misguided reform. An appropriate program will recognize that our responsibility is two-fold: to engage in more responsible individual behavior and to take a constructive role in driving appropriate systemic reform.
The sad truth is that our own behavior created this crisis. Wall Street did not engineer this meltdown without our assistance. Our spending, saving, and investing habits tested the limit of our ability to earn and the system’s ability to transparently allocate risk. We contributed to the untenable increase in real estate values, financed discretionary spending with temporarily cheap credit, and spent our incentive compensation before it was earned. Unfortunately, these decisions were based on unrealistic expectations, and the bill has come due. The price stability, full employment, and easy credit of our recent past are unlikely to reappear. Since markets are comprised of individuals, their psychological state plays a major role in their decision making. As a result, the road to recovery begins with appropriate individual perspective and personal financial accountability.
But to keep that pendulum from swinging too far in the wrong direction, we as individuals must decipher the appropriate level of spending, saving, and risk-taking; everything cannot be reduced to zero. Responsible spending to keep the neighborhood restaurant or store in business and continuing to contribute to our 401k will help our local economy and will allow us to finance a healthy and leisurely retirement. Similarly, our decisions at work must reflect the fact that our companies are, in fact, going concerns. Since there is an eye-watering amount of qualified, educated, creative talent on the sidelines, those of us fortunate enough to still be employed should embrace the opportunity to cherry-pick the next generation of leadership at a bargain. Many of these talented job-seekers hold degrees from UConn.
On a larger scale, each of us has the responsibility to prevent overzealous regulation from pushing the pendulum from swinging so far as to choke off American enterprising spirit and stable economic growth. A repeat of the Sarbanes-Oxley legislation should be avoided, as its good intentions have been eclipsed by additional, costly bureaucracy and reduced US competitiveness. After all, the primary goal of a bureaucracy is to justify and perpetuate its own existence, not to consider its own irrelevance. Individual intervention and oversight is imperative. Admittedly, there have been incredible frauds and failures that could have been mitigated by effective regulation. Our regulatory system, with its foundations in 1930s legislation, certainly reached its limits in managing the negative externalities of certain financial innovations. Reform is required. That said, the march of financial innovation must be allowed to continue. Over time, it has improved economic efficiency and our quality of life through consumption timing, risk management, and price discovery.
The global economy is more complex and interdependent than ever before. However, all markets are comprised of individuals whose behavior and decisions have an impact on the aggregate. This economic crisis amounts to a perfect storm that formed through a confluence of previously uncorrelated developments. The way we spend, save, and invest, how the government regulates these activities, and private sector financial services will likely change forever. Navigating this tempest as an individual is a frightening proposition. Through the aggregate benefit of constructive individual efforts, however, we will emerge more intelligent and stronger than before. In this quest, I cannot help but reflect on my grandparents’ generation, which rose up to conquer seemingly insurmountable challenges during the 1930s and 1940s. Time is of the essence, so let us please join together to slow the momentum of that pendulum. If successful we may eventually earn our grandchildren’s reverence as America’s Second Greatest Generation.