I heard this question from a caller to Tom Ashbrook’s On Point today, and it’s a good one:
“How is it that any time we talk about safeguarding Social Security or national health care, we’re told, “The money’s not there,” when in the last couple weeks, the government has extended hundreds of billions of dollars of loans to wealthy Wall Street firms?”
I think that’s a great question, and I think I’d sharpen the question even further by offering my own;
“Why is it that each time we talk about safeguarding Social Security or national health care, we’re told, “That’s enabling the poor,” while when investors treat Wall Street like a casino and start to reap the consequences of their actions, the government leaps to their aid and bails them out in what is clearly enabling their actions?
Do you think if the normal citizen was caught in a bad loan, they could approach the Federal Reserve and simply switch from the bad loan to a better one?
I will say that it’s been great to see Washington step up to the plate and deny the multi-million dollar severence packages of the former Fannie Mae and Freddie Mac CEOs; men who still profited greatly from destructive financial decisions that resulted in the loss of tens of thousands of jobs and nationwide economic stability.
And in response, evidently both McCain and Obama have stepped up their rhetoric on the Wall Street crisis.
Obama called for more aggressive regulation, saying,
“The challenges facing our financial system today are more evidence that too many folks in Washington and on Wall Street weren’t minding the store,” Mr. Obama said. “Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to C.E.O.’s while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression.”
Hopefully Obama would act justly and back up his words in a presidency or continued Senate role. He has received $9.9 million dollars from individuals in the securities and investment industry, so he’s certainly not free from the voice of Wall St. folks and their strings attached to contributions. And when it comes to the so-called “golden parachutes” of CEOs, Obama has co-sponsored a bill with eight other Democrats that is currently before the Senate Banking Committee, S.1181, that would amend the Securities Act of 1934 to include a separate shareholder vote on executive compensation. With the present situation being a board of fat cats approving clauses for another fat cat, I’d say extending approval to shareholders at large is a step in the right direction when it comes to restoring some equity in how business is done. Sounds a little too drastic for Washington, since there’s a good number of them who are former top executives in the private sector. We’ll see.
McCain has forcefully talked about cleaning up Wall Street, saying,
“We are going to reform the way Wall Street does business and put an end to the greed that has driven our markets into chaos…We will stop multimillion dollar payouts to CEO’s who have broken the public trust. We will put an end to running Wall Street like a casino. We will make businesses work for the benefit of their shareholders and employees. And we will make sure that your savings, IRA, 401k and pension accounts are protected.”
While it’s great to hear big rhetoric in the aftermath of this crisis, I have to comment that it’s a little strange to hear John McCain talk about reforming Wall Street when detailed analysis of his consistent position as a public servant has been completely against regulation of investment firms of any kind. Rings a little hollow. And I chuckled a bit when I heard McCain speak about stopping “multimillion dollar payouts to CEOs who have broken the public trust,” being that McCain’s top economic advisor (and one-time candidate to be his running mate) Carly Fiorina was dismissed as the CEO of Hewlett Packard in 2005 after a merger with Compaq floundered, stock prices plunged 50 percent, and 20,000 people were laid off. Fiorina walked away with a $21.4 million severance package.
Asked whether McCain was talking about CEOs like Fiorina, McCain spokesman Brian Rogers said McCain was “talking about the issues that are before us today.” You know, he’s right. How unwise to consider how the past gives insight on the present and future. Clearly the past doesn’t have anything to say about one’s present positions.
“We’re talking about Freddie and Fannie and CEOs like Jimmy Cayne of Bear Stearns, Angelo Mozilo at Countrywide, folks that are largely responsible for what happened and walk away with this kind of multimillion dollar payout,” Rogers said. “I don’t think there’s any analogy there,” he said, referring to Fiorina.
To suggest there’s no analogy there is laughable, especially when 20,000 people lost their jobs at HP The American people should be smart enough to catch on to this. I emphasize should be…we often let ourselves be dumber and more naive than we really are.