The top headline in the local newspaper at the time of this writing is about a $3 billion federal fraud investigation into the business affairs of Tom Petters, former CEO of Minnetonka-based Petters Group Worldwide.

The same paper had similarly disheartening articles: a top Minnesota Department of Natural Resources officer resigned after an audit revealed that his agency illegally solicited donations for a game warden conference; a Minnesota Department of Health and Human Services supervisor was under investigation for allegedly stealing $1 million by cashing fraudulent checks; and an Anoka County judge was charged with four gross misdemeanors for failing to file tax returns.

Practically every day, we hear about someone in a leadership position trying to better his or her own finances at the expense of others. From Main Street to Wall Street to Pennsylvania Avenue, our leaders are quickly losing the right to be called leaders.

Business leaders on Main Street are committing fraud to take money away from employees and shareholders and put it into their own pockets.

On Wall Street, the executives of Bear Stearns, Fannie Mae, and AIG ran their companies into the ground and then were “rewarded” by the federal government’s bailout. AIG celebrated its success in getting bailout dollars with a $450,000 party, just to cite one example of excess.

On Pennsylvania Avenue and at the Capitol, the bailout plan was able to get enough passing votes only after a myriad of pork-barrel projects and tax breaks were added so that congressional leaders would have something to brag about back home while competing for reelection.

It Stinks Around Here
The stench of greed is making me sick! Unfortunately, wealth has become the number-one idol in our society. Greed permeates every aspect of our lives. Well, I say, “No more!” I am outraged by the lack of oversight and accountability in our business and political systems. Where are the corporate directors of these companies? Where are the checks and balances envisioned by the authors of the Constitution? We are being smothered by a glaze of gluttony, self-indulgence, and cover-your-ass attitudes.

Elections are supposed to make politicians heed the opinions of voters. The falling home values, 401(k)s, and IRAs, combined with the price increases of gasoline, groceries, and everyday items, are making the government react in its usual knee-jerk fashion. According to congressional leaders, the president, and presidential candidates, the answer to this problem is more regulation.

The current regulatory system has been built from lessons learned from past financial crises. The October crisis will probably result in well-capitalized banks regulated by a more unified governmental system. As a former bank executive, I understand that a certain amount of government action is needed to stabilize the banking system and preserve the free-market economy.

However, greed caused us to look away from lessons provided by the Asian financial crisis of 1997, which was caused by speculation along with poor regulation and supervision. The American system of cheap credit and loose lending standards built an economic house of cards. How long can we recycle debt through financial wizardry before someone cries out that the emperor has no clothes?

The reckless behavior of a few business leaders has created a global situation. Now, power-hungry government leaders can rise up like a sleeping giant to wield the sword of regulation. If we’re not careful, we will make Karl Marx’s prediction that “capitalists will sow the seeds of their own destruction” a reality. In “Das Kapital”, Marx wrote that capitalism’s neglect of history would lead to cycles of collapse, and these cycles would be characterized by an “army” of unemployed, falling profits, increased concentration of industry in the hands of a few, and misery in the working class. Sound familiar?

Where Will It End?
I am wary of the premise that government regulation will put an end to fraud and greed. I do not believe that we can effectively legislate moral behavior. Need I remind anyone that Congress passed the Sarbanes-Oxley Act (SOX) only a few years ago? SOX requires every CEO and CFO of every U.S. public company to sign off on their company’s quarterly and annual financial reports, stating they are true and accurate, under the penalty of perjury. All corporate directors must sign an annual statement, again under the penalty of perjury, that they have not received any kickbacks or been influenced to sign off on false financial statements.

Yet SOX hasn’t stopped fraud in its tracks, has it? It’s interesting to note that while we require the leaders of U.S. corporations to sign such statements, we do not require the members of Congress, the president, or the cabinet to do the same.

I’m reminded of the old Chinese proverb, “A fish rots from the head down.” After all, if a family is dysfunctional, does it make any sense to look to the kids as the ones causing the problem?

What Can We Do?
I believe that most business leaders are honest and ethical and share my frustration. I hold out hope, however, that more business leaders will take a stand against unethical behavior, and that self-regulation will rule.

I look to the prophetic vision of Theodore Roosevelt’s speech on July 4, 1886, at a 110th anniversary celebration for the Declaration of Independence. At the time, he was a 27-year-old ex–New York assemblyman and a Dakota rancher:

“Like all Americans, I like big things: big prairies, big forests and mountains, big wheat-fields, railroads, and herds of cattle, too, big factories, steamboats, and everything else. But we must keep steadily in mind that no people were ever yet benefited by riches if their prosperity corrupted their virtue . . . each one must do his part if we wish to show that the nation is worthy of its good fortune. Here, we are not ruled over by others, as is the case in Europe; here we rule ourselves . . . we have the responsibilities of sovereigns, not of subjects. We must never exercise our rights either wickedly or thoughtlessly; we can continue to preserve them in but one possible way: by making the proper use of them. In a new portion of the country, especially here in the Far West, it is peculiarly important to do so.”

Might I suggest that we are currently living out a new version of the Far West? I beg you to listen to Roosevelt’s words. It’s time for us to recapture the good and fair values that were once the foundation of our society and of our businesses.

Business leaders must be the beacons for ethical leadership. We can’t just give lip service to ethical behavior; rather, what we do from this point forward will speak so loudly that nobody will hear what we have to say. We need to demonstrate ethical leadership. Let’s not tolerate greed or greedy behavior anywhere in our organizations—from the boardroom to the mailroom. Let’s regulate ourselves by not just auditing our financial statements, but auditing our value statements as well.

Our forefathers gave us the right to prosper in this great nation through the freedoms they secured for us, including our capitalistic, free-market system. We, in turn, have a duty to protect this gift, and to ensure that we do not fail in passing it on to future generations due to self indulgences, and greed. Please join with me in saying, “No more!”