Thesis on "Managerial Challenges"

Thesis 6 pages (1837 words) Sources: 5 Style: APA

[EXCERPT] . . . .

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.

Thus a management plan for coping with the financial crisis will relate to

the changes in U.S. policy which are coming into phase under the oversight

of the present administration. A core difference between the Obama

Administration and the Bush Administration is the current president's

philosophical orientation toward stricter regulatory control over private

financial activities, a distinct transition in managerial philosophy. This

comports with a plan calling for a stronger emphasis on public investment

in financial recovery coupled with far greater regulatory oversight of both

private activity and fiscal policies. To this point and with recognition

that reckless economic liberties helped to invoke a massive transfer of

wealth, "President Obama ordered the Treasury Department to prevent the 165

million dollars of executive bonuses from being paid in the insurance giant

American International Group in March, while the executives returned part

of their bonuses under the pressure of public reprimand." (Tong, 1) This

is a principle of Operations Management that correlates personnel

compensation with performance quality. In a staggered economy, the

performance of these leaders of industry has been rightfully called into

question. The project a plan designed to undermine those elements of the

private sector which have usurped the managerial authority of the U.S.

government.

The result is a managerial orientation that is now geared toward

survival. According to the text by Hacker (2006), there is an ever-

diminishing concreteness and stability underlying the American economy with

the outcome being a context of sheer risk for those without the means or

intent to undertake such. Certainly, one of the core management failures

of the previous administration was a characterization of economic

conditions that was primarily stimulated by the experiences of wealthy

business owners and other financially elite Americans. This would not only

prove fabricated by corrupt misrepresentation, but would further illustrate

a perspective on the financial crisis separate from the suffering of those

on the lower rungs of the socioeconomic ladder. The bailout packages

produced by the Obama Administration, though widely criticized by the

presidents political opponents, illustrate an understanding that it has not

been the spending liberties of the federal government but the misdirection

of resource which has allowed so drastic a collapse. Thus, Moseley (2009)

would report that the "Obama administration and Democrats in Congress are

working on a second, much larger stimulus package of about $850 billion,

which will consist of two-thirds increased spending (with emphasis on aid

to states, education, unemployment benefits, and public works

infrastructure projects and one-third tax cuts (mainly on payroll taxes).

This second stimulus package will be somewhat more effective than the

first, mainly because it is so much bigger, and also because more of the

total money is for increased spending rather… READ MORE

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