Why is the former chief of Fannie Mae still a director of a public company as prominent as Goldman Sachs and Target?

How can Charles O. Prince III, the former chief executive of Citigroup, who resigned under pressure in 2007 amid huge write-downs at the bank, be an acceptable director to the shareholders of Xerox and Johnson & Johnson?

What about E. Stanley O’Neal, the former CEO of Merrill Lynch who stood by while his firm bought up so much subprime debt that it almost bankrupted the company? He is now a director of the aluminum giant Alcoa.

Andrew Sorkin of The New York Times raises questions that should make us all wonder about the moral guidance and credibility these disgraced leaders can bring to the companies on whose boards they sit.

At least Eduardo Castro-Wright, vice chairman at Wal-Mart, who oversaw the company’s $25 million bribery campaign, resigned last week from the MetLife board.

But, when might he also resign from the Wal-Mart board?

Andrea Jung, who stepped down as the CEO of Avon, in part as the result of a bribery investigation, remains a director at Apple and chairwoman at Avon.

A recent pole by Edelman on what profession was the least trusted identified corporate CEOs. I guess they didn’t ask about board members.

This is no way to run America’s largest companies. We live in an age where business barely sticks to the letter of the law, and often behaves with moral bankruptcy. It’s time to clean up corporate boards.

Good corporate governance starts with:

1. Diversity. Electing more women (who currently hold less than 16% of all board seats) and racially-diverse board members.
2. Employee Inclusion. Employees should elect at least one board member. Employees are critical stakeholders, but they rarely have a voice.
3. Fiduciary Responsibility. Board members must determine what’s in the best interest of the company and its shareholders in terms of long-term prospects and interests as well as social, environmental and economic effects of any action.

I don’t see disgrace and unethical behavior on that list.