Corporate Boards Should Add Diversity to the Mix

by Steven Davidoff for Dealbook – New York Times, March 8th, 2011.

Directors can be trouble. Just ask Goldman Sachs and Morgan Stanley.

The Securities and Exchange Commission has accused a former Goldman Sachs board member, Rajat K. Gupta, of facilitating insider trading while he was on the Goldman board. A current Morgan Stanley director, Howard Davies, has resigned as head of the London School of Economics because of his dealings with Libya.

The news about the two men throws a spotlight on the boards of the two firms for the first time since the financial crisis. Goldman and Morgan were, of course, the two Wall Street investment banks that survived the crisis and that not so coincidentally had better corporate governance than their peers.

But has anything really changed in the boardroom since the crisis?

Heightened scrutiny, to be sure, has led these firms, as well as others, to shake up their boards. Morgan Stanley has three new directors. Goldman also has three new directors and has shrunk its board to 11 members from 12. Citigroup and Bank of America, which together received over $90 billion in federal help, have a majority of new directors. (continue reading… )

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