Is Congress bound to exercise reasonable ‘duty of care’ as it tries to avoid the looming debt ceiling showdown that could force the US into default?
Is Congress bound to exercise reasonable ‘duty of care’ as it finds a way to end the ongoing government shutdown and tries to avoid the looming debt ceiling showdown that could force the US into default?
One definition of duty of care from the Legal Information Institute says:
The duty of care stands for the principle that directors and officers of a corporation in making all decisions in their capacities as corporate fiduciaries, must act in the same manner as a reasonable prudent person in their position would.
It sounds like a reasonable request, and because the economy of the US is at stake, in this case it could be argued that members of Congress are acting as fiduciaries for the American people. If the governance community were to hold Congress to the duty of care and the business judgment rule, Congress would be sorely lacking. There is very little chance members of congress could convince a judge that as the fiduciary for US citizens they have exercised ‘reasonably informed, good faith, rational judgment without the presence of a conflict of interest.’ The conflict of interest in this case is the politics of both parties, which has taken priority over the best interests of the American people. Can someone in Congress explain how shutting down the government and subjecting the US to the negative effects of defaulting on its debt is in the best interest of US citizens? The country would like to know.
We at Corporate Secretary ask members of Congress to expect of themselves what they expect of boards of directors in the business community – the ability to exercise good judgment that does not put stakeholders at risk. To act in a manner that ultimately does not harm shareholders – in this case the American people. We can only hope Congress is listening.
If Congress fails to pass legislation to increase the nation’s debt ceiling, and that results in the US defaulting on its debt and triggering another fiscal collapse that sends the world into a second global recession in five years, will Congress show the same outrage toward itself as it showed toward Wall Street bankers after the fiscal crisis of 2008? Will Congress hold hearings on its own behavior that created the crisis, parade each other in front of microphones and TV cameras and hammer each other with hard questions? Let’s hope we don’t have to find out.
