“The last month has really exposed the lack of fiduciary behavior in corporate America, from JPMorgan to Best Buy to Yahoo. Imagine if you were a Navy admiral and you ran your ship aground. You don’t get a fat severance payday. You don’t get to take a few years off and try again.”
It was the Friday before Memorial Day, and Lt. Commander Jeffery Lay had climbed aboard his favorite soapbox. A former Navy fighter pilot who flew sorties in the first Iraq War and—as a wealth advisor at a Lehman Bros. asset management unit—a veteran of the financial crisis, Mr. Lay has been telling anyone who will listen that the financial services industry would do well do redefine itself around the U.S. military’s cornerstone concept. “We call it service before self,” he said.
The Observer first heard the pitch in early May, when Mr. Lay was in town to tout his book, Topgun on Wall Street: Why the United States Military Should Be Running Corporate America. In subsequent weeks, the business world rocked from embarrassment to scandal and back—from JPMorgan’s $2.3 billion trading losses to Yahoo CEO Scott Thompson’s resume-gate and the improprieties in the executive offices of Best Buy and Chesapeake Energy.
Mr. Lay’s argument: That the lessons in accountability taught in the armed forces translate well to the corporate world—that a 24-year-old Navy aviator entrusted with a $78 million aircraft could teach Ivy League-educated risk manager a lot about taking care of other people’s assets.
It’s not quite a controversial position, but the stance puts Mr. Lay in an unusual middle ground—he’s a critic of Wall Street’s sometimes-cavalier approach to risk, and also of the regulations that would rein risk-taking in. (Mr. Lay said he came of age in Ronald Reagan’s Navy, and named his daughter after the 40th president: “You can’t legislate against bad behavior,” he said.) On the other hand, it’s not as though the American armed forces have a perfect record. Could fixing Wall Street be as simple as putting ex-military men in charge?
Well, said Mr. Lay, the finance industry could take a lesson from the story of the Topgun flight school, which was founded to help Naval aviators learn from past mistakes: “Almost everyone wakes up in the morning with good intentions. It’s the process of learning from mistakes that’s flawed.” Or for that matter, the way the military mentors future leaders: “On Wall Street, too few people are groomed—it’s more like they’re cherry-picked. In the military, everyone is groomed for command.”
But Mr. Lay said putting veterans in important roles would make a good start.
“It’s good business to hire veterans,” he said. “It’s altruistic, it feels good. But it’s got to be more than something on a press statement. We’ve got to get past the idea that, ‘These are people with discipline and work ethic.’ That’s true. But the main reason to hire a vet is you’re hiring someone who knows what it means to be held accountable.”