An open letter to CEOs who recently testified before Congress about the financial meltdown:

We notice that you are having a hard time apologizing for your roles in bringing down the nation’s financial sector, launching a recession, a housing and foreclosure crisis and double-digit unemployment. During recent testimony before the Financial Crisis Inquiry Commission, established by Congress to investigate the Wall Street meltdown, we watched as you fielded a few tough questions but stopped short of taking responsibility for your actions. The best you could offer was “mistakes were made,” “it’s regrettable that people lost money” and “There were things we could have done better.” My favorite evasion: “Whatever we did, it didn’t work out well.” Glad to see you guys are still masters of the understatement.

Allow us to give you advice on how to apologize. First, admit what happened, and your role in it, instead of trying to scapegoat others –– poor people, moderate income homeowners, auto workers, etc. –– or suggesting that the meltdown was similar to an act of nature.

In addition to showing real contrition and admitting to your mistakes, you need to put your money where your mouth is. And by this, we don’t mean creating a guilt-based fund for tax deductible donations to your favorite charities. Nothing says ‘I’m sorry’ like giving back those exorbitant bonuses. During the testimony, you offered no regrets about recent increases in executive pay. To justify huge compensation packages and bonuses, you talked about the need to attract and keep ‘top talent.’ Given how badly you and your managers missed (or ignored) signs about the housing crisis, and the colossal failures of your so-called ‘exercises in risk management,’ we question the value of your ‘top talent.’ Maybe you should give that argument a rest. It just makes us 'lesser talents' who are paying for your mistakes angrier.

We also noticed in your testimonies some vague language about correcting compensation practices that encourage excessive risk-taking. If you want to show how sorry you are, and show that you are changing your ways, take some bold, decisive steps and revamp the whole incentive structure. And do it out in the open, so that we can see and evaluation the changes you are making (if, indeed, anything is really changing). 

You also say taking risks is a necessary part of doing business. Without it, there is no innovation. Without innovation, we’ll see limited economic growth and expansion. But we and other reform proponents are not saying ‘stop taking risks.’ We are saying a couple of things that are subtly but significantly different: Be honest about the risks you are taking; stop pedaling financial products dishonestly. And don’t ask us to pay for the consequences of the risky transactions that don’t work out for you. Accept the fact that you need a consumer financial protection agency to help you be more honest. And, your contrition will seem more sincere if you agree to pay a small fee on risky transactions and also contribute to a bailout fund that would cushion the next downturn.

Another hint about apologies: We don’t want empty promises about how you are going to change your ways voluntarily. Let’s face it. Self-policing doesn’t work well in this kind of situation. To earn our trust, you must stop fighting against financial reforms. You could go further, and even champion reform, because you know you need help. As the CEO of Goldman Sachs admitted during testimony (when asked about GS's habit of betting against the mortgage-backed securities they were selling): “We got caught up in and participated and therefore contributed to elements of froth in the market.” This may surprise you, but we are somewhat sympathetic. The temptations were too great –– the political and regulatory climate was too lax, and your ties to the real economy had become too abstract. Who wouldn’t succumb? That’s exactly why we need a robust regulatory framework, greater accountability and clearer ties between financial sector and the rest of the economy (i.e. a reversal of financialization).

All we are asking, really, is that you become a team player, and recognize that you are not in business just to enrich yourselves. You are there to serve the needs of the economy as a whole. That’s why we bailed you out. In exchange, we expected you to do your part in getting investments flowing in our communities and businesses. It’s really not too much to ask.