John Bogle, founder of the mutual fund group Vanguard, has an excellent article in the Wall Street Journal, which is re-printed in part at economist’s view, where there are also a series of thoughtful comments following the Bogle post.

Bogle wrote: “But self-interest got out of hand. … Dollars became the coin of the new realm. Unchecked market forces overwhelmed traditional standards of professional conduct, developed over centuries. … We’ve moved from a society in which “there are some things that one simply does not do” to one in which “if everyone else is doing it, I can too.” Business ethics and professional standards were lost in the shuffle. … The old notion of trusting and being trusted … came to be seen as a quaint relic of an era long gone….

The managers of our public corporations came to place their interests ahead of the interests of their company’s owners. … The malfeasance and misjudgments by our corporate, financial and government leaders, declining ethical standards, and the failure of our new agency society reflect a failure of capitalism. …”

Beezer here.  But in the commentary there was one observation that stockholder interests may be different than society’s.  I disagree with that viewpoint.

I wrote the following in response to the original comment by wjd123.

One hears a lot of free market folks denigrate government’s ability to run a bank, or just about anything for that matter.

So, how good is the free market investor?  Citi shareholders today returned to office all the top executives, and directors, responsible for the virtual destruction of this once proud bank.  The returns weren’t even close.

This is the crew that oversaw a 90% decline in City stock value, as well as the bank being subsidized by the many billions of dollars to keep it from officially going bankrupt.   If the preferred stock owned by the government (read taxpayers) had been converted into common, voting stock, you can be certain everyone in the top suite, as well as every director, would have been unceremoniously shown the door.

And that would be the rational decision.  But shareholders and directors, particularly in the TBTF financial businesses, long ago abandoned any semblence of independence or common sense.

The government, in truth, couldn’t have done worse.