Managerial Oversight of the U.S.

Managerial Oversight of the U.S. Financial Crisis Executive Summary: The financial crisis is a product of managerial absence in the U.S. private sector. The U.S. government neglected these responsibilities, particularly during the Bush administration, allowing for the corruption and fraud that helped to bring about economic collapse. The discussion here considers a plan for more effective government management principles in going forward, resolving that the Obama Administration must enact strong managerial oversight for the private sector through the government.

Introduction: The current recession is considered among the worst in U.S. history. As it has been characterized by policy experts, public officials and members of private industries alike, the U.S. economy is experiencing a financial crisis which is surpassed at present only by the Great Depression which persisted across the 1930s. As public officials in the Obama Administration enact dramatic and controversial legislative packages in order to reverse an already cresting tide, it is clear that the very same Departments of the U.S. Government which have helped to create the disastrous conditions now afflicting the nation and global economic community are those upon which we are now relying to alter a pointedly problematic economic path. The discussion contained here is driven by the severity of the current economic crisis and the range of policy debates which surround it. Ultimately, the financial crisis is a massive managerial challenge characterized by a current transfer in power. After the managerial failures of the Bush Administration, the Obama Administration has stepped in to assume managerial control. This research is grounded by a recognition that the financial crisis as has been instigated by an absence of managerial oversight. All indications are that there are observable causes in U.S. policy and in U.S. delegation through its various federal financial departments which may have stimulated the current recession. Accordingly, Tong (2009) would report that "the crisis has its roots in the imbalance of the global economic structure, years of freewheeling lending in the United States and loose regulation on financial markets. The crisis was triggered by a subprime mortgage meltdown that erupted in the United States in the summer of 2007, which forced closure of many companies that largely invested in products related to subprime mortgages and tightened credit around the world." (Tong, 1) Here, the journalist would frame what has become a global crisis in an assertion that most policy errors may be traced to the U.S. orientation toward both global and domestic markets. This reference in the Tong study to loose regulation is particularly pertinent as the discussion here aims to introduce the failure of the Securities and Exchange Commission, as one example, to properly function in its regulatory role as a federal department. Such failures underscore the premise that significant managerial negligence allowed the financial markets to behave destructively, irrationally and without fear of reprisal.

This is to suggest that the Bush Administration generally acted throughout its tenure on a pattern of philosophically and practically unfounded economic presumptions. These would lead to a meltdown in the U.S. housing market, which our research identifies as an oft-misconceived cause for the current condition in which our economy is attempting to recover. That is to say that where Brewer (2009) is concerned, it was not the housing bust but the housing boom which should be seen as largely to blame for today's recession. Brewer argues that the high price of housing relative to that which individuals could afford would be a significant factor, itself produced by departmental failures owing to executive policy. Brewer queries accordingly; "How did house prices get too high? The answer to that question (which has mostly to do with bad interest rate decisions from the Fed interacting with bad public policy in financial market regulation) will help us prevent the next financial crisis. But for addressing this financial crisis, all we need to understand is that the correction is not the root cause. The root cause is that house prices got so high that the average household couldn't afford an average house." (Brewer, 1) The absence of managerial control on the part of the government reflects a free market ideology that has proven flawed. The premise that private companies could be trusted to provide themselves with ethical oversight and to present financial outlooks without scrutiny would allow for massive fraud, corruption and commercial exploitation. Because the government declined to act in the role of a conscientious manager, such behavior ran rampant until it ultimately helped to hasten the decline of the United States economy. Some major concerns to be addressed through the course of this research are those relating to the broader impact of U.S. policy decision. This is to say that all evidence frames the economic crisis as having a substantial radius of fallout for the global economic community. The emphasis on globalization, trade liberalization and monetary regionalism across the same decade leading to the financial crisis all have produced an interdependency which makes the economic recession in the United States a problem faced by all members of the world community. So is this reported by Tong, who tells that "as the crisis caused downturns in European and U.S. economies, exports to those countries tumbled and developing countries were affected. The IMF provided at least 52 billion dollars to Hungary, Serbia, Latvia and Ukraine, which saw severe capital flight and a sharp drop in exports." (Tong, 1) This is to indicate that the crisis is ever- unfolding throughout the world community and that the ability of American federal policy to reverse the patterns which it helped to set into motion may well be called into question altogether. New issues in the area of policy adjustment will be those relating to the approach taken by the U.S. in its international posture and approach. From an operations management standpoint, these are external factors which impose a significant effect upon the government's ability to truly manage its private organizations. In the globalization scheme, if we are to consider American private firms as being analogous to departments internal to a single company which in this case is the United States, we can see that such departments are also increasingly under the purview of partners other than the United States. For the U.S. government, this is an operations management challenge that is requiring a change in perspective.