Professors who teach undergraduates will also need to inform deans about their time commitments outside the university, Michael Riordan, chairman of the economics department, said this week. The university’s law and business schools ratified similar guidelines in April and May.
Ties between the financial world and academia have been scrutinized since the release of “Inside Job,” a film that won the Academy Award for best documentary in February. Columbia Business School Dean Glenn Hubbard and finance professor Frederic Mishkin were portrayed offering their expertise without revealing they were paid by interested parties. While Columbia adopted universitywide ethics policies in 2009, professors said the movie spurred them to look at how they could be sharpened.
“’Inside Job’ has brought the subject to the fore,’’ Riordan said in an interview. “I don’t think it uncovered a serious problem in the profession but to the extent it has prompted a debate and caused people to think more carefully, that’s all for the good.”
$124,000 From Iceland
The policy and planning committee of the Faculty of Arts & Sciences, the professors who teach courses in subjects such as economics, history and biology, approved a draft of the new rules Sept. 20, said Riordan, who headed a subcommittee that wrote the guidelines. They were sent to Nicholas Dirks, the executive vice president for arts and sciences, who may enact the rules next week, Riordan said.
The film asserts that Columbia professor Mishkin wrote a positive paper about Iceland’s economy in 2006 after receiving $124,000 from that country’s chamber of commerce. Mishkin didn’t disclose the payment in the paper, according to the film. In 2008, Iceland’s banking industry collapsed, defaulting on $85 billion and sending its currency down 80 percent against the euro.
Under the 2009 universitywide rules, Mishkin would have had to reveal the financial connection in the paper, said Gita Johar, senior vice dean at the business school. The new business school rules would also require him to post them in his online resume.
Mishkin didn’t respond to a request for comment.
Some professors at Harvard University in Cambridge, Massachusetts, and Harvard Business School were also criticized in “Inside Job.” Harvard adopted a universitywide policy in 2010 and all its individual schools will draft specific guidelines for their professors by the end of the 2011-2012 academic year, said B.D. Colen, a Harvard spokesman.
Columbia’s faculty committee looked at standards set by other colleges including Cambridge-based Massachusetts Institute of Technology, Riordan said.
The Columbia Business School rules, approved by the faculty in May, also require professors to list outside activities on their online resumes and to notify the dean’s office about them and how much time they require. Professors must also adhere to 2009 guidelines that require them to disclose in publications if they have financial ties that relate to their research.
While the business school’s rules weren’t motivated solely by the film, it made their adoption more urgent, Johar said.
“The financial crisis and ‘Inside Job’ were definitely in the background and made the issue more salient,” Johar said. “The school has been trying to address these issues since 2009, long before ‘Inside Job’ came up in classroom conversations with students.”
Columbia Law School adopted rules in April prompted by “Inside Job,” said Harvey Goldschmid, a law professor and former member of the U.S. Securities and Exchange Commission, who co-chaired the committee that drafted the policy.
“Inside Job and other things have spurred that type of sensitivity to financial disclosure,” Goldschmid said. “It’s just good sense to respond. There is generally a greater distrust of institutions, including academic, in society. Certainly the movie did spur some reactions and I think they are healthy.”
“Inside Job” also depicted Hubbard, the Columbia business dean and former White House economic adviser under George W. Bush, getting angry when asked about his consulting clients. The film noted that he was paid $250,000 annually to serve on the board of MetLife Inc. (MET) and consulted for other financial firms. It also described a 2004 paper Hubbard co-wrote with William Dudley, then the chief economist for Goldman Sachs Group Inc. (GS), praising credit derivatives.
In an e-mailed statement, Hubbard said he has always disclosed his outside activities and sources of income.
Posting outside interests online allows the public to make their own judgments about professors’ biases, Johar said.
“If faculty are quoted in the press or when you are interviewed, it’s about your research, but all those disclaimers and disclosures aren’t part of their public press presence,” Johar said.
Columbia’s policies also need to require professors to mention if they have a financial connection when testifying before Congress or governmental agencies, said Charles Ferguson, the director of “Inside Job.”
“Very full disclosure should be required and the new policies don’t go far enough,” Ferguson said in a phone interview. “But they are a step forward.”
Riordan said that such connections would have to be disclosed in any written testimony submitted to Congress.
Ferguson said professors should also disclose how much they are paid by outside sources. In some cases -- such as being paid to testify before Congress -- outside compensation should be banned, he said.
The business school considered and rejected requiring faculty to inform the dean about how much they received from outside sources, Johar said.
“It’s pretty intrusive,” Johar said. “There’s a limit to what you can require without getting into privacy issues.”
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