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By John Goff
By almost all
reckoning, the current economic catastrophe was triggered by excessive
risk-taking. That risk-taking was fueled by greed and enabled by a feeble, self-regulatory
scheme.
Well, you can’t do
much about greed. And remarkably, it appears that finance executives don’t seem
all that interested in attempts to overhaul the regulatory setup.
Case in point:
while attending a recent conference run by Big Four audit firm Deloitte, 120 or
so leading CFOs were asked what public policy issues the Administration should
focus on. Fully 43 percent of the finance chiefs answered ‘ending the
recession.’ Reforming the messed-up financial system -- the putative cause of
that recession -- didn’t even come
in second on their list. Tax reform was. Indeed, slightly more finance chiefs
(19 percent) said the White House should focus first and foremost on tax reform
than on fixing the financial system (18 percent).
“The past few years
were all about excess — now we have to get fit,” said Mark A. Buthman, senior
vice president and CFO of Kimberly-Clark and an attendee at the conference. “We
have to stay on top of basics like expenses, liquidity and debt ratings to be
in shape so that we can be agile enough to take advantage of opportunities to
grow our business.”
Granted, CFOs are
in the budgeting and planning business. They tend to take a long-term, macroeconomic
view of things. And they don’t like surprises.
But the view that
public-policy makers should attempt to treat economic symptoms -- and not the
underlying causes of those symptoms -- seems like a bad case of tunnel vision.
When asked about
what most concerned them, a third of the CFOs told Deloitte they were worried
sick about the shape of the economic recovery. Many said they were fearful the
recovery would resemble a ‘W.’ Others are more concerned about an L-shaped recovery
-- that is, one that’s marred by stagflation.
Far fewer CFOs said
they were most worried about health-care costs – even though medical costs are
becoming a larger and larger driver of both government debt and inflation. And
when finance chiefs say they want the government to focus on tax reform, the
odds are good they’re either talking simplification of the code or tax breaks
for businesses. Neither would seem to be particularly helpful in reducing the
inflation engine known as the government deficit.
One side note: more
than half of the surveyed CFOs expect improved business conditions in 2010. But
some finance chiefs said they’re concerned about the possible permanent
destruction of industrial and consumer demand.
That
would be quite a legacy for a financial services industry that was allowed to operate
unchecked.
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in In Compliance by 
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