It’s not difficult to see the inexcusable gross overspending in some of America’s corporations. For years, some actions at the highest corporate levels have been indisputable flamboyant abuses of shareholder money. And when that behavior continues in companies that receive exorbitant federal “bailout” funds, credulity is strained beyond limits.
Consequently, the fury that President Barack Obama and Congress have expressed concerning this behavior is fully warranted. Congress has hauled some (even if often the wrong) managers into publicly broadcasted hearings to belittle and humiliate them. President Obama has chosen to make piñatas out of these abusers in his teleprompted speeches. The result? The appearance that something is being done.
The irony, however, as has been frequently pointed out, is that both the president and Congress are guilty of the very same practices. The “stimulus bill” and all of the subsequent abusive spending in the “omnibus bill” and budget are, to our nation, far more extreme than any malfeasance done by any corporate executive. The transfer of wealth embedded in these plans makes Bernard Madoff’s Ponzi scheme appear rudimentary.
Since Congress and President Obama have repeatedly utilized the terms “accountability” and “transparency” in their rhetoric, it is time to insist that they be held to the same standards they place on their “subjects.” If the Obama administration and Pelosi-Reid Congress are allowed to drastically dilute and erode our free market system through their extreme forms of government regulation and spending, then their standards of regulation should be made equally applicable to their abuses as well. It is time that we address our public servants in the same ways we have chosen to treat our corporate executives. After all, as they put our nation on the road to eventual hyper-inflation or stagflation, the eradication of the dollar, and depression symptoms that will make the Great Depression not so great, they deserve at least the same level of regulation placed upon corporate America. They not only serve us but are fully federally funded in doing so.
One “change” that needs to be instituted is to eliminate, or significantly loosen, the immunity from criminal and civil actions that these officials enjoy. Ironically, the current Congress and president should favor this as it affords them an excellent way to repay one of their biggest constituents for their votes — the trial lawyers. Just as corporate executives have to face legal issues while in office, there is no need to protect Barney Frank or Harry Reid from the same burdens of the law while they are supposedly “serving” our interests. This is especially true when the charges would concern issues of spending and oversight as compared with those issues more intimately connected to foreign policy and national security for which immunity is more meaningful. Such release from immunity will certainly guarantee they will give that extra surge of consideration before further destroying our financial system.
Earlier in this decade, Congress enacted Sarbanes-Oxley in response to the Enron and various other corporate fiascoes. The essence of Sarbanes-Oxley is to significantly increase public disclosure and to then hold CEOs and other high officials personally liable for what is presented to the public. Accordingly, corporations have taken on huge expenses, not to mention time burdens, to comply with these requirements. Similarly, directors and officers have taken on emotional burdens in managing their personal responsibility for their actions.
This same formula should be made to apply to our officials. Barney Frank and Chris Dodd are frequently cited as having direct responsibility for the failure of Fannie Mae and Freddie Mac as well as the “predatory lending” that underlies our current economic struggles. If America were Americorporation, these two and others would be out of office by now, under investigation if not on trial, all at their own expense. Rather, Barney Frank sits arrogantly in his chair boisterously trying to offload his guilt by blaming everyone else for his obvious abuses. President Obama reels at the executive spending while he and Congress have embarked on what everywhere else would be considered “criminal” amounts of spending. And Chris Dodd has been allowed to promise disclosure of his inside deals with Countrywide Financial while sitting quietly on the side hoping everyone will forget. Where is the accountability that President Obama promised? Some form of governmental Sarbanes-Oxley regulation would go a long way toward preventing this.
Furthermore, state corporate laws have various versions of a cause of action entitled “waste of corporate assets.” If management and/or directors can be shown to have misused or squandered assets they can be held liable to shareholders. This, in part, serves as a true disincentive to many who would otherwise treat the corporation’s assets as their own. Corporate law relies in large part upon the shareholders to take action to ensure their “corporate servants” are performing their duties properly. One method is voting directors in and out — just as our population is able to vote its public officials in and out. But shareholders also have a variety of additional legal actions available to them. Should not we, as citizens, share those same tools? Why should Chuck Schumer be able to get away with pontificating about the auto companies’ deplorable behavior in using federal funds for their own bonuses, while he goes in front of the country describing Congress’ own despicable uses of “pork” — each expenditure aimed to pay back their voters to their own benefit — as de minimus and nothing to worry about?
State corporate laws often have a cause of action against “insider transactions.” Often these laws require that the transaction be approved by a majority of non-insider related directors, subjecting those directors to personal liability if they misjudge the fairness of the transaction. President Obama and the Democrats made a major issue of “lobbyists” and the “same old ways of Washington,” suggesting that all sorts of insider transactions occur in our system. Rather than having to wait until after a violation is discovered, would it not be a better safeguard to have any suspect transaction pre-approved by some truly independent group? Imagine what that would do to straighten out our deficit.
President Obama and his minions sell a notion that suggests that President Bush is responsible for all the evils that exist today. Therefore, since the right saviors are now in office, it is sold that we need not be concerned about their potential abuses. First of all, this is nonsense. The Democrats have controlled Congress for the past two years. And even during the preceding “Republican controlled” Congressional years, the Democrats were able to block many of the crucial actions President Bush and others sought to take to stop the absurd lending practices that existed. Putting aside the Carter and Clinton years, it was Barney Frank, Chris Dodd (assisted by minority shakedown artists), and ACORN who forced banks to enter into lending practices they otherwise would never engage.
In 2001, the White House budget request warned of the dangers of Fannie Mae and Freddie Mac. In 2003, it further warned of a “systemic risk” that could spread beyond the housing sector. The administration pushed for a regulatory agency to oversee Fannie and Freddie only to be blocked by Democrats including Barney Frank who argued that there was no crisis, these institutions were fundamentally sound financially, and that any pressure against them would cause a lessening in terms of affordable housing.
In 2005, Alan Greenspan gave clear notice of the dangers we were facing in the absence of strengthened regulations. In 2006, Senator John McCain co-sponsored legislation for more regulation in the Senate Banking Committee, which all the Democrats voted against. The legislation was never brought to the Senate because Republicans believed they would never be able to push it through. If this level of denial and failure to properly oversee practices had occurred in any corporation, Barney Frank would have been the first to haul them into hearings so that he could humiliate and punish them on C-SPAN.
More importantly, this is not the concept that is applied to the banks, auto companies, insurance companies, and so on by this “new” government. Rather, the new managements are forced to live under restraints that did not exist for those who claimed to have created the problems in which they find themselves. The changes are prospective there and ought to be generously applied to those in public office today — especially those with oversight responsibilities.
Why should Nancy Pelosi be allowed to waste our assets on her exorbitant airplane? Even John McCain was able to embarrass President Obama into forfeiting the ridiculous helicopter that had been ordered for him. Imagine if the public, as shareholders, could join in the act. President Obama heralds his great transparency in posting on the Internet how his “stimulus” money will be spent. Yet the public has no means to do anything about it. A Sarbanes-Oxley-like rule would help ensure that the disclosure is truly as full as he suggests it will be. Some form of a “waste of national assets” law would help ensure there is little offensive in the full disclosure. Some form of holding others personally liable for vetting in advance any insider-like transaction would greatly inhibit abuses before they occur. It is shameful that a mayor is forced to resign from office for sharing an apparent politically incorrect, racially-charged photo, yet Barney Frank, charged with oversight while having significantly destroyed our economy, is able to remain in office another day.
If we are going to buy into the Democratic oratory concerning accountability and transparency, we must apply it first to the Democrats. Just as they are now complaining that the banks were given bailout money with no strings attached, we the citizenry are giving President Obama and this Congress preposterous sums of our own with no means to protect ourselves from their abuses. Given that this is the government of excessive regulation, what is missing screams loudly. We should immediately be afforded at least these mechanisms and these officials should be the loudest advocates. If the current government is going to force excessive regulation upon us, they must be subjected to the same. In the long run, that is all that separates us from tyranny.