Sunday, December 4, 2011

A Hookah Pipe Dream

Me, with beard and hoodie, dressed to fit in with OWS
I’m growing a beard. My wife doesn’t like it. She turns her head when I go to kiss her. “It’s prickly,” she complains. Well, I’m feeling prickly. I don’t like what I see in the American political or business arenas. So I’m growing the beard in solidarity with the Occupy Wall Street (OWS) folks. I’m not sure what they don’t like, although articulating their complaints seems to be high on the list.

There are several things I don’t like, and I’m sure if I wandered around an OWS camp like James ‘ACORN’ O’Keefe (he takes photos of people misbehaving), I’d find common ground on many of them. For example, I don’t like James O’Keefe.

But let’s stick to the theme. How do I loath thee, Wall Street, let me count the ways.

    • I don’t like banks taking TARP money and then paying their executives huge bonuses.
    • I don’t like financial institutions like Goldman Sachs cheating investors.
    • I don’t like the lack of public and quasi-public oversight of our financial institutions.
    • I don’t like the executives of companies that led the American economy down the garden path to the dump going unpunished.
    • I don’t like corporations being people -- they’re so antisocial.
A judge just threw out the Securities and Exchange Commission's proposed $285m settlement with Citigroup, which was accused of misleading investors in one of those toxic mortgage schemes at the peak of the US housing bubble. If I recall correctly, he called the amount of the fine, “rounding error” for Citigroup.
The SEC is supposed to be riding herd on Wall Street, but it’s letting the bulls run and feeding the rest of us manure. The SEC has had a longstanding practice of levying relatively minor financial settlements alongside de facto waivers of civil liability for the guilty. “Wealth management institutions,” as they like to call themselves, commit fraud and pay small fines, and the SEC allows them to walk away without admitting to criminal wrongdoing. Nice work if you can get it, and you can, and that brings me to my next dislike.
I hate the fact that no one went to jail. AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley were run by people involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. And the aforementioned Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. No one has been indicted, let alone gone to jail. And no one was watching. And that brings me to my next dislike.
I don’t like the total ineptitude of the Federal Reserve, the FDIC, the Office of the Comptroller of the Currency, and the Commodity Futures Trading Commission, and other federal institutions, including the Justice Department. Justice is blind, only not in a good way.
And then there’s our Congress. So much to dislike and so little space to rail about it. But let’s stay with the theme -- Wall Street. Because running for office in the House and Senate requires raising obscene amounts of campaign cash, and because special interests are willing to contribute said cash, we have encouraged a system of legalized bribery. Wall Street leverages that system (Wall Street likes the word ‘leverage’), and the revolving door between the Fed and employees of Wall Street -- once you were a crook, now you’re a regulator -- to preempt and/or weaken regulatory reform, such as the Dodd-Frank bill.
The only way we’re going to solve the problem of a bought and paid for Congress is to institute a system of publicly funded elections -- no 527s, PACs, Super PACs, Pack-of-Money of any kind, soft, squishy, slimy, or otherwise. No endless robocalls at all hours. None, nada. This is what OWS should be demanding, but that brings me to my last dislike.
I dislike the search-and-destroy partisanship in Congress that makes campaign finance reform a hookah pipe dream.
Given the likelihood of any of these dislikes being addressed by Congress anytime soon, the OWS folks, and my beard, may be around for a while.

Sorry honey.

2 comments:

Richard Badalamente said...

Regarding the issue of punishment:
The Sarbanes Oxley Act, passed after the Enron scandal, imposed strict rules for corporate governance, requiring chief executive officers and chief financial officers to certify under oath that their financial statements are accurate and that they have established an effective set of internal controls to insure that all relevant information reaches investors. Knowingly signing a false statement is a criminal offense punishable with up to five years in prison.
Frank Partnoy is a highly regarded securities lawyer, a professor at the University of San Diego Law School and an expert on Sarbanes Oxley.
Frank Partnoy: The idea was to have a criminal statute in place that would make CEOs and CFOs think twice, think three times before they signed their names attesting to the accuracy of financial statements or the viability of internal controls.
Kroft: And this law has not been used at all in the financial crisis.
Partnoy: It hasn't been used to go after Wall Street. It hasn't been used for these kinds of cases at all.
Kroft: Why not?
Partnoy: I don't know.
(From an interview on 60 Minutes, 12/4/11)

Patricia said...

The movie, The Big Short is a very good dramatization of what happened to cause the global economic meltdown http://www.imdb.com/title/tt1596363/