Infectious Greed

Is money the root of all evil? You might argue one way or the other...but it was definitely the impetus behind what Federal Reserve Chairman Alan Greenspan dubbed “infectious greed” back in 2002: a money-making, book-cooking, stock-price-inflating mindset that dominated corporate governance at the turn of the millennium.

In an ideal world, stock prices increase and decrease, that information is recorded, and companies and investors move on with their lives. In the 2002 world of infectious greed, however, something a little different was happening. Companies were taking advantage of regulatory loopholes to make their business look like it was performing better than it was, which made their stock price rise. This loophole-taking was cooked into the books and reported as if nothing shady was going on. Meanwhile, execs lined their pockets with the proceeds. As execs from other companies cottoned on to what those shademeisters were doing, they too began to inflate their companies’ earnings, making themselves more money via their fancy stock options. On and on this behavior went, spreading from business to business and industry to industry like it was contagious. Or infectious, as the case may be.

Anyway, the end result of all this infectious greed was misrepresented earnings, overinflated stock prices, and misinformed investors. Mr. Greenspan advocated for regulations that would help stop this kind of thing from happening in the future…or if it did happen, would keep it from spreading as virally as it did before.