Keynote Speaker: Harvey Pitt

To kick off the conference, Harvey Pitt, former Chairman of the SEC, gave a thought-provoking keynote address, speaking about the current difficulties facing the United States government, the public sector and government regulators. Touching on the challenges of creating and enforcing effective regulation, Mr. Pitt spoke of his criticisms of the Dodd-Frank act, what regulation the United States needs, and what business leaders need to do in the future to both be successful and avoid another crisis.

Mr. Pitt began by noting that often the debate focuses on whether we have “too much regulation or not enough.” But that focusing on this is wrong and distracts us from the true issue, which is that there is “not enough smart regulation and not enough smart regulators.” The Dodd-Frank act however, does not address this issue, but instead layers on more bureaucracy to the system and opens regulatory agencies like the SEC and the Federal Reserve to increased political pressures. But we must acknowledge that this is going to be the law, and we must operate within the new regulations.

Further, Mr. Pitt stressed that companies must realize that good governance is good for business, and that companies must understand and manage risk. Mr. Pitt then outlined specific recommendations for how business and government should interact, including:

• Business should be required to furnish government with a steady stream of data
• Mandate that the government analyze that data and disseminate in real time
• Authorize the government to set trip wires so that potentially significant economic trends can be halted while the government determines if trends are dangerous.

As a business school student, I was particularly inspired by Mr. Pitt’s call-to-arms of sorts for future business leaders. There are challenges ahead, certainly, but there are ways to prepare, educate, and mitigate those challenges. Here are Mr. Pitt’s points on what good business should do (please note that I’m paraphrasing Mr. Pitt’s remarks):

• Advance planning is critical – if you haven’t started already, you’re late
• Hope for the best, assume the worst
• Avoid negativity
• It is important to educate federal regulators – the implicit assumption that government always knows what it is doing is dangerous and often untrue
• Can’t use the excuse: “that’s the way everyone’s doing it.”
• Avoid conflicts
• Having a solid management team is essential
• Risk management is essential
• Whistleblowers are coming, so be prepared. Businesses must reinvigorate ethics and compliance programs.
• If business doesn’t speak up, it won’t be heard.
• Get your boxing gloves ready. Be prepared to deflect or rebut arguments that your company poses a systemic risk to us markets
• Maintain a sense of humor

It’s a tall order, but one that I believe myself and my classmates are ready to undertake. This keynote speech created a wonderful platform for the rest of the conference; we were able to address issues of jobs, systemic risk, and corporate social responsibility. Can We Innovate Our Way Out? By asking the hard questions and engaging in these discussions, we’re putting ourselves on the right track.