Back in January, when BrightScope CEO Mike Alfred started calling 2009Â the “Year of Transparency”, very few people took him seriously.Â Gradually however this idea is taking hold.Â Here are some recent events, articles and thoughts that align on this issue:
- New President Barack Obama pledges to run the “most open and transparent government in History.”
- Wired Magazine writes an amazing, must-read article entitled “Radical Transparency Now“
- Barack Obama chooses Vivek Kundra -an advocate of government transparency- as the Government’s new CIO.
- XBRL is officially supported by the SEC and 500 of the largest companies will begin filing using XBRL in 2009.
- Several major ponzi schemes are uncovered – Madoff and Stanford – that help escalate the need for increased transparency in the financial markets.
- Ron Paul files the “Financial Reserve Transparency Act of 2009” calling for transparency at the Federal Reserve.
- Infosys CEO Kris Gopalakrishnan’s philosophy on transparency: “When in doubt, disclose“
- Nobel Laureate Harry Markowitz identifies the current economic crisis as a “Financial Transparency Crisis“
Why is everyone advocating for increased transparency?Â I think that the people who created the Financial Trust Index at the University of Chicago state the case very convincingly:
” . . . something important was destroyed in the last few months. It is an asset crucial to production, even if it is not made of bricks and mortar. This asset is TRUST. While trust is fundamental to all trade and investment, it is particularly important in financial markets, where people depart with their money in exchange for promises. To study how recent events have undermined Americansâ€™ trust in the stock markets and institutions in general, we have launched the Chicago Booth/Kellogg School Financial Trust Index.”
The Financial Trust Index shows that trust in the nation’s financial institutions is at a low point.Â While there are no quick fixes, I would argue that those companies that embrace openness and transparency will restore trust in their brand more quickly than those who fight transparency.Â In short, transparency provides the best way to restore trust.
Let the sun shine!