Financial Health and Toxicity – Mutually Exclusive

This week the government announced a new plan to rid the financial system of so-called “toxic assets”, a general term for assets that have exposed their holders to large losses. It is these assets that have paralyzed both the credit markets and the investor community from moving forward because, to date, no one has been able to determine the extent of their poisonous reach. So to restore some semblance of confidence, the government is proposing to build an entity to capture, hold and somehow try to sell these blemished instruments.

It looks like their overall framework for economic recovery encompasses two strategies. First, remove these black hole assets from institutional balance sheets to facilitate systemic solvency, focus and confidence. And secondly, refine the regulatory environment to support prudent lending practices going forward.

While no one’s sure if these measures will ultimately work…I do buy into the framework. It’s both reactive…dealing head on with the current crisis and proactive…creating an environment where it is less likely to happen again.
At a more personal level, there are certainly indicators that economic toxicity is trickling into our workplaces.

Early this year, the Society for Human Resource Management (SHRM), surveyed its members and confirmed the effects of economic stress.  In the previous 12 months, members had seen a 26 percent increase in employees having their wages garnished by collection agencies; a 39 percent increase in requests for 401 (k) plan loans; a 20 percent increase in requests for pay advances; and a 14 percent jump in employees reporting having lost their homes.

This is obviously not just somebody else’s problem. I recently asked a Fortune 1000 SVP of Human Resources if she believed the money worries were affecting the productivity of her workforce. Her response was swift and direct, “absolutely… I have no doubt that we are being negatively impacted.” And just as swiftly she has recently led her company to install a cutting edge financial wellness program. With this kind of win-win leadership, it’s no wonder that they are consistently named on all those “Best Places to Work” lists.