Magazine Column

*Your Voice: A New Deficit Problem*

**By David Lykken**

***Our nation’s fiscal deficit is dominating today’s news. There is another deficit crisis however, that is NOT getting much if any attention. I am referring to the leadership deficit in this country…both in the private and the public sectors.

****Leadership has been a topic of interest to me and I have always enjoyed reading inspiring stories about leaders who overcame serious and complicated problems. One such life and death crisis was the Apollo 13 mission back in 1970. “Houston, we have a problem!” were the now infamous words of Jim Lovell, mission commander, when he radioed NASA’s Mission Control Center in Houston. As you may recall, he was advising Mission Control that they had just experienced a major system failure and they were in serious trouble. The key to a successful outcome to the Apollo 13 mission was an amazing collaborative and creative effort led by strong leadership centered on a core set of mutual values and virtues. 

****To say our industry has experienced a massive “system” failures is an understatement. Leadership was at the core of the problem. Brilliantly chronicling all of this is an amazing new “must read” book “RECKLESS ENDANGERMENT” written by Gretchen Morgenson and Joshua Rosner. This book specifically and in detail reveals how our former leaders, some of which are still in power, unwittingly engineered one of the biggest financial crisis in the history of the US. It exposes how the former leaders of Fannie and Freddie, guys like Jimmy Johnson, Frank Raines, David Maxwell, Tom Donilon, Leland Brendsel, Tim Howard, Tom Nides and Herb Moses, to name a “few” were at the epicenter of what evolved into today’s epic financial crisis. The book provides a clear and detailed timeline of events that were led to our present day financial disaster. It explains how leading politicians and government officials, guys like former President Clinton, Congressman Barney Frank, Senator Christopher Dodd, Representative Maxine Waters, Treasury Secretary Robert Rubin, Deputy Secretary of the US Treasury Larry Summers and on and on, were involved and even helped engineer what has brought our country and our industry to the brink of disaster. And sadly we aren’t even close to the end of this crisis. It is an ever growing and evolving problem all the result of BAD LEADERSHIP… past and present. 

****It is as if our country has contracted an usual and ugly form of cancer. The disease is bad enough but what is more disconcerting than the disease itself is what our “leaders” have prescribed as the “cure”. In fact, their idea of a “cure” may be proving to be more fatal than the disease itself.  

****All of this has caused me to intensify an already strong interest in studying what makes for good leadership. My thought is, “If bad leadership got us in this mess, then good leadership will lead us out.” In my studies, what I’ve found most alarming is that most Americans wouldn’t recognize good leadership if it walked up and slapped them across the face. Our concept of good leadership is in need of serious repair and re-visioning.    

****I have always believed in the concept that pure “truth” is based upon easy to understand principles. Deception, on the other hand, is a process of perverting or twisting “simple truths” and making things unnecessarily complicated. In fact, I have learned that the more elaborate the deception, the more twisted are the facts. To understand good leadership, we need to return to a more simplistic understanding of what makes for a good leader. I have been writing for months on this topic and have arrived at a list of seven characteristics, the “7-C’s”, of what makes for a good leader. They are as follows:

****Character – A simple definition is “the combination of qualities, values, attributes, traits or nature that distinguishes one person or group from another.” A key word is “values”! One’s values are the single greatest determining factor in the make up of a leader. Good character should have always been synonymous with leadership but regrettably, it has not. In the last business cycle, greed seemed to trump good character. I pray that as a result of today’s financial crisis we, the electorate, will be much more focused on character than anything else when selecting future leaders. While leaders will never be perfect, one’s values will be examined more closely and “virtue” will not be viewed as some outdated concept.

****Conviction – A strong leader has to believe deeply in their mission and this belief has to come from their heart, which relates back to character. That is why when following a leader you have to know their character. If you follow someone with deep convictions anchored in a compromised character, the outcome has a much higher probability of failure. Real leaders genuinely believe what they believe and do so from the core of their being. That is why conviction has to be anchored in good character especially when facing the challenges we have ahead.

****Confident – Because of the difficulties that lie ahead, a strong future leader is one who must possess and portray a heart-felt confidence that is ‘birthed’ from a deep conviction in sound principles rather than power. We can spot arrogance from a mile away and people of the right character will not follow the arrogantly over-confident counterfeits of yesterday.

****Charismatic – Future leaders will have a genuine warmth about them and are not the “full-of-themselves” charismatic types of the past. They will be “real” as the expression goes. In other words I would describe them as “relatable” and “magnetic”, but this time for all the right reasons. 

****Clear and Concise – A good leader eliminates confusion, and communicates in such a way as to bring clarity to otherwise confusing matters. LO Compensation is an example of this as there is so much confusion surrounding the coming changes. A strong leader intensely studies whatever issue they are facing and forms a clear plan understandable by all, and then will be able to communicate it concisely.

****Communicator – A good leader is one who has an exceptional ability to communicate, and do so in the clearest and most concise manner possible regardless of complexity of the topic. A leader has a good grasp of all the facts and details and then effectively communicates that knowledge in a way that is easily understood by the greatest number of people. 

****Compassionate – The leaders of tomorrow need to be more compassionate than hard-nosed. Those with a “my-way-or-the-highway” attitude will be rejected! With so many going through such severe hard times, it is essential that the leaders of tomorrow be genuinely compassionate towards those who are struggling without getting caught up in their difficulties. There’s a fine line here that true leaders seem to innately know how to walk.

****I am out of time and space for this article, but challenge everyone that has an interest and/or desire to become a leader to carefully consider the above 7-C’s. And for those of you who don’t feel called to leadership, at least make sure that before going to work for or voting for or following someone proclaiming themselves a leader, use the above seven characteristics as a measuring stick. 

****I firmly believe we, as an industry and as a country, will emerge stronger than ever from this crisis. However, it will ONLY happen if we have strong leaders that lead with the right values. 

****ABOUT THE AUTHOR: David Lykken has his own national weekly radio program called “Lykken On Lending” that can be heard each Monday at Noon Central time by going to As co-founder and Managing Partner of KLS Consulting doing business as Mortgage Banking Solutions, David has over 37 years of management experience as an owner/operator with in depth expertise in real estate finance and housing.



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