Let's see if I understand the 12 (or maybe 13) digit bailout of private companies that has been proposed and administered by the Bush Administration using public funds. Its provisions seem to be:
"- Little if any due diligence in advance of giveaway of public money. "- No independent audits of the private companies getting the public money. "- No appraisals of private assets being acquired by the public money. "- Limited or non existent documentation accompanying the giveaway of the public money. "- Few, if any, restrictions on how the public money was to be used. "- No voting control on the equity positions in private companies purchased with the public money. "- Little collateralization or protection of the loans to private companies made with the public money. "- No personal guarantees by the private management or shareholders receiving the giveaways of public money. "- No enforcement of what few written loan and/or equity purchase documents might exist. "- No assurance the public money would be or was used as authorized or promised to the taxpayers and Congress. "- Little if any direct help for the distressed homeowners for which the public money was set aside. "- No change in the bankruptcy laws either restricting creditors or helping mislead debtors. "- No serious efforts at curtailing bonuses or huge salaries being funded by public money for CEOs or other top management in charge during the fiasco. "- No serious efforts at prevention of the public money being used by private companies merely to acquire competitors. "- No investigation of what went wrong and who was responsible or even whether the means and methods were justified before spending a sum of public money that large. "- Little or no new regulation to reinstitute conservative (small "c"-); i.e. safe, lending traditions. "- Little or no increase in staff and budgets of the regulatory and enforcement agencies. "- No removal of those individuals in government or the private companies whose decisions ultimately lead to the fiascos necessitating bailout. "- No prosecution or punishment of apparent criminal fraud and misrepresentation within the private companies being bailed out with the public money. "- No tracking of whether the methods were successful (and, by "success"- it is not meant just putting massive amounts of the public money in the private hands of the already rich who were probably instigated or perpetuated the mess). "- No reporting to and receiving permission from Congress before the Treasury Secretary chose to unilaterally modify the use of the public funds. "- Not even disclosure of who received the public funds, how much, why or how.
Surely, a recipe for fraud, misappropriation and, more importantly, more of the same.
When "Heckofajob"- Brownie was fired from FEMA after Katrina, did Treasury hire him? All kidding aside, the government lawyers who drafted the Bailout documentation should be investigated for possible ethics violations and certainly for gross incompetence. Disbarment ought to be considered given how badly this has been bungled from the beginning. They must have gotten their law degree from schools that advertise on matchbooks.
Changing the watchdogs who failed in their duties is only part of what needs to be done. One of the primary reasons for our latest titanic financial disaster was deliberate and massive obfuscation. How can you regulate something if you can't see what is going on? How can even the active participants involved (buyers, sellers, borrowers, managers, investors) make an intelligent decision one way or the other if they don't have access to critical facts? Hell, how can even speculators adequately analyze risk versus reward without reliance that the data provided is not deceptive? It becomes more akin to a pure gamble, a bet against house loaded dice, rather then a well considered investment. Adam Smith's Capitalism can fair, but as he pointed out, the data upon which it is based must not be false or misleading and available to all.
The reckless greedy thieves in charge of our financial institutions prior to the 1980s Saving & Loan Industry debacle, the even more reckless and greedier thieves in charge of the late 1990s tech stock bubble and the most reckless, greediest conceivable thieves of all in charge for the past decade prevented that by doing everything possible to hide what they could and mislabel what they couldn't. That strategy was combined with a condescending paternalism that they knew best; that we couldn't possibly understand; and that anyone who even asked, let alone complained, was ignorant or a "socialist."- Together those thing set the stage for utter disaster.
The misdirection and slight-of-hand was rampant and pervasive. If it had not been for the false labeling, even the village idiot, possibly even George Bush, could have recognized that you should not give a $500,000 house loan with no money down to someone out of a job and with rotten credit. That was not how it was presented to the unsuspecting public though. And, the ponzi scheme worked, worked for the perpetrators anyway, right up to the point when it was too late because the debt had come due.
The blame cannot be wholly assigned to the criminals on Wall Street, the stock brokerages, the bank headquarters and the insurance execs. They had the terrible example of Congress and the White House who do the same obfuscation with the federal budget. The national budget is not even close to being a real representation of the country's income and expenses. Social Security, war in Iraq funds, all kinds of other things are "off budget,"- called other things. Then there is the voluminous set of special tax code provisions where benefits to campaign contributors and fellow travelers are hidden in obscure, almost indecipherable clauses.
Politics as usual in Washington demonstrates that lying to the voter is okay and will not be punished or even closely scrutinized. Politicians do it because if the voters actually knew how they were being ripped off and lied to might vote for someone else. The Iraq War for instance? It would appear that it is free of cost. Someone else is supposed to pay for it, certainly not us. Our grandchildren apparently, not current taxpayers. Something for nothing dominates the centers of power, especially now that the Republicans ferreted out all bureaucrats who still had a sense of honor and foolishly believed in honoring their oath of office.
Why wouldn't we expect Wall Street to follow the same path? The almost funny part is that they got so greedy, so caught up in their raping and pillaging while they burnt down their own structures, some of them forgot to get out of the fast enough. After a while, they could not even understand their own con schemes.
How to finally prevent this sort of chicanery? Obviously, lots more regulators and the staff and funding to let them do their job and the freedom to do so. Let the states and municipal governments enforce as well rather than federal only jurisdiction that the current Administration insisted upon.
That is not nearly enough though. If there are no adverse consequences to those malefactors who lead us into this cesspool, it will assuredly happen again. So, use the RICO laws regarding criminal conspiracy to seize their assets (the good assets as well as the worthless ones they want to stick the taxpayers with). In fact, use the Patriot Act and other sedition laws to go after them for endangering the national security. Try them as criminals. Maybe send them to Gitmo for a vacation. They after all have proven themselves far more dangerous to this country's future security than any insurgents captured on a battlefield. Also, take back their bonuses and salaries which we know realize were obtained under false pretenses. Most importantly, impeach the politicians who aided and abetted them.
Why try them for treason? Keep in mind, the cutbacks in health care, port security, and military preparedness that will be caused by these astronomical losses are going to ultimately kill more people than the 9/11 terrorists dared dream.
Most importantly, get back to fundamentals with transparency of financials especially of the books and records of those spending money of others, with true independence of investigators and auditors, with clarity and ease of understanding documentation and with new penalties for ignoring common sense in the future.
resistence-is-possible.blogspot.com
It's probably obvious I'm a CYNICAL PESSIMIST. Why a cynical pessimist? Possibly it's the result of expending a full lifetime defending, first with rifle in hand and then with a legal pad, "truth, justice and the American Way." Observing the less than perfect result and the fact that it must be unending tends to incubate pessimistic cynicism.
There is actually a better answer though. As a pessimistic cynic, I know I'll always be either right or delighted.
I'm probably also affected by the fact I live at the very edge of the earth, about as far as someone can get from our nation's centers of power and still have dry feet. (Minor quibble to establish my unfailing honesty: I don't actually live at the edge. Nevertheless, I really can at least see the edge from here.)
The commentaries submitted to this website are some of the views from that edge, for the most part political and social observations and questions tinged (or perhaps more accurately, tainted) with humor to make the point.
The name "lawless one"? It was my call sign in Nam and ironic in other ways.
Elected officials are by definition reactive. They listen to the voters and make their pitch accordingly--but add some frills to make it attractive. Money grows on trees, only because a dollar is eaten up with inflation. When the wind blows the dollar goes with it and here is the voter--bad job prospect and higher prices.
Then the screaming starts and the politicians find other work--probably as lobbyists. And the pundits yell Accountability, Responsibility, and Transparency. After which things will change. With luck, citizens will get by without paying for more war--and everyone will pitch in, getting decent pay for a decent day's work. If that doesn't happen and no one watches what's going on, first thing you know we have an even bigger war. Long and short: Human power, natural resources and money will be used for war otherwise. A war economy, which we have now, sucks life out of real economy.
by
Margaret Bassett (38 articles, 2206 quicklinks, 30 diaries, 1501 comments)
on Tuesday, November 18, 2008 at 4:52:31 PM
1 comments
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