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This down-fall of such huge companies is not just a failure of the financial system, but also a massive leadership failure across the financial services landscape. This type of leadership lapse dates back to 1980s when companies began to align executive compensations
with share-holders interests. Excessive interest in personal financial goals as against the larger interest of the organization is one of the root-cause of this debacle. Another point is that many managers choose not to lead at all. They believe that if they hire smart people, give huge incentives for personal results, the management of the firm would take care of itself. Under such circumstances, taking risks to achieve personal goals even if that puts others or organization in danger seems acceptable. These particular leadership failures have been a major cause of this full-scale meltdown of US financial sector.

Based on the above discussion, it can be judged that the scenario of financial sector is grim. Such crisis situations do require some desperate measures as has been taken by the federal government. It also provides us a retrospective view to analyze what went wrong and avoid such failures in the future. So though the melt-down is surely for real, it's by tackling it properly that the financial sector can come up with greater strengths in the future.

Concluded.

* Contributed by: -
Madhav Sharma had been a Marine Engineer by profession while Sumit Singh had been a Software Engineer before they joined Ist Year Full-Time MBA at NMIMS, Mumbai.
Article posted on October 11, 2008.