January 1, 2009
At year’s end, we see retrospectives of the most important events, numerous top ten lists and recognitions of achievement in one area or another. 2008 brought a record level of cynicism to the American people because of the economic catastrophe, the Bernie Madoff scandal and the cartoon-like escapades from the Presidential campaign. Accordingly, it seems only appropriate to pay homage to the biggest Jackass of the Year. Since I advertise this website as a “Blago-free zone”, the current Governor of Illinois is automatically disqualified from the competition. So, let’s take a look at some of the runners-up and finally, the winner of the Jackass of the Year Award.
Our first contestant is John Ensign. He is chairman of the National Republican Senatorial Committee, representing the State of Nevada in the United States Senate. On November 2, 2008 he appeared on the CBS television program, Face The Nation with Bob Schieffer. Election day was two days away and Ensign found it necessary to blame the likely Republican losses on the economic downturn. He described the Republicans’ fate in these terms:
“And we were starting to do very, very well, but when the financial crisis hit, that financial crisis really is — has been a — almost a body blow to Republicans. And unfortunately, it was allowed to be portrayed that this was a result of deregulation, when in fact it was a result of overregulation.”
That’s right. Ensign Douchebag thought he could convince the public that the economic crisis was the result of over-regulation of the financial system, rather than the deregulation described by everyone else in the world. That noble statement certainly rates runner-up status for the Jackass of the Year Award.
Our next contestant is Reverend Jeremiah Wright, former pastor of Chicago’s Trinity United Church of Christ and embarrassment to Barack Obama. Thank God Reverend Wright’s fifteen minutes of fame are finally over. Although his infamous sermon with the less-than-patriotic remarks about America was given in 2003, by April of 2008, Rev. Wright made a point of resurrecting the controversy concerning his disappointing association with Barack Obama. At that time Wright hit the road, appearing on Bill Moyers Journal, speaking before the NAACP and giving a grand performance before the National Press Club. He made a fool of himself all three times and (perhaps to his disappointment) his bad karma never rubbed off on Barack. The pastor has also been a disgrace to the name of the Right Reverend Carl Wright (comedic sidekick of Chicago blues maven, Pervis Spann). Although Jeremiah Wright rated recognition, the competition for the Jackass Award was tough this year.
We cannot overlook the valiant efforts of Joe “The Tool” Lieberman to win this honor. Although the people of Connecticut elected Joe to represent their state in the Senate, The Tool spent most of 2008 looking like a stray dog, following candidate John McCain around the campaign trial. You can find my prior rants about Senator Lieberman here, here, here and here.
We must also give consideration to Christopher Cox, the chairman of the Securities and Exchange Commission. John McCain was on to him. It just wasn’t fair that poor, old Senator McCain took so much heat for pointing out that Cox had to go. McCain made the mistake of stating that he, as President, would have authority to fire Cox. Although he was wrong about that, he was right about the notion that Cox had been a problem for the SEC. On December 16, Jessie Westerbrook of Bloomberg news reported that Cox was blaming his subordinates for the enforcement lapses that allowed the scam, perpetrated by Bernie Madoff, to continue for several years after the SEC should have stopped it. Cox apparently believes in the doctrine that “the buck stops” several levels below himself on the SEC food chain. The environment at the SEC, with Cox at the helm, was best summed up in a December 27 article from the Los Angeles Times by Amit Paley and David Hilzenrath. Here’s what they had to say about the tenure of Chairman Cox and his performance during the economic crisis:
Though Cox speaks of staying calm in the face of financial turmoil, lawmakers across the political spectrum counter that this is actually another way of saying that his agency remained passive during the worst global financial crisis in decades. And they claim that Cox’s stewardship before this year — focusing on deregulation as the agency’s staff shrank — laid the groundwork for the meltdown.
“The commission in recent years has handcuffed the inspection and enforcement division,” said Arthur Levitt, SEC chairman during the Clinton administration. “The environment was not conducive to proactive enforcement activity.”
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But former officials said enforcement suffered during his tenure. A pilot program begun last year required enforcement staff to meet with the commissioners before beginning settlement talks in certain cases involving nonfinancial firms. Some former officials said the change was just one example of new bureaucratic impediments that slowed enforcement work. The commissioners also made clear that they thought staff members were being too aggressive in some cases, the officials said.
”I think there has been a sentiment communicated to rank-and-file staff, lawyers and accountants that you don’t go after the establishment,” said Ross Albert, a former special counsel in the enforcement division.
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An analysis by law firm Morgan, Lewis & Bockius showed that the SEC’s actions against broker-dealers, who serve as intermediaries in financial trades, dropped about 33%, from about 89 cases in fiscal 2007 to 60 cases in fiscal 2008.
Heckuva’ job, Coxey! Nevertheless, you have been overshadowed in this year’s competition.
The winner of the 2008 Jackass of the Year Award is a professor from Russia, named Igor Panarin. He is a former member of the KGB, who is apparently so upset over the breakup of the Soviet Union, that for the past ten years, he has been predicting that the United States would also break up. On December 29, Andrew Osborn reported in The Wall Street Journal that Panarin has been doing two interviews per day, discussing how “an economic and moral collapse will trigger a civil war and the eventual breakup of the U.S.” The article explained:
Mr. Panarin posits, in brief, that mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar. Around the end of June 2010, or early July, he says, the U.S. will break into six pieces — with Alaska reverting to Russian control.
Worse yet, the other five parts of the country will supposedly become republics that will be part of or under the influence of Canada, the European Union, Mexico, China or Japan. Osborn’s article included a picture of Panarin’s map, showing how the various segments of the country would be apportioned. Panarin’s ideas have brought him quite a bit of publicity . . . and TheCenterLane.com’s Jackass of the Year Award for 2008! Congratulations, Jackass!
Clean-Up Time On Wall Street
January 5, 2009
As we approach the eve of the Obama Administration’s first day, across America the new President’s supporters have visions of “change we can believe in” dancing in their heads. For some, this change means the long overdue realization of health care reform. For those active in the Democratic campaigns of 2006, “change” means an end to the Iraq war. Many Americans are hoping that the new administration will crack down on the unregulated activities on Wall Street that helped bring about the current economic crisis.
On December 15, Stephen Labaton wrote an article for the New York Times, examining the recent failures of the Securities and Exchange Commission as well as the environment at the SEC that facilitates such breakdowns. Some of the highlights from the piece included these points:
On December 18, Barack Obama announced his intention to name Mary Schapiro as the Chair of the Securities and Exchange Commission. Many news outlets, including National Public Radio, presented an enthusiastic look toward the tenure of Ms. Schapiro in this office:
On the other hand, in the December 18 Wall Street Journal, Randall Smith and Kara Scannell provided us with a more informative analysis of the SEC nominee’s track record:
It appears as though we might see Ms. Schapiro face some grilling about the Madoff appointment, when she faces her confirmation hearing. Beyond that, the points raised by Randall Smith and Kara Scannell underscore the question of whether Mary Schapiro will really be an agent of change on Wall Street or just another “insider” overseeing “business as usual”. To assuage such concern, many commentators have emphasized that Ms. Schapiro has never worked for a brokerage firm or investment bank. Her Wall Street experience has been limited to regulatory activity. Despite this, one must keep in mind a point made by Michael Lewis and David Einhorn in the January 3 New York Times:
Michael Lewis is the author of Liar’s Poker, a non-fiction book about his own Wall Street experience as a bond salesman. With David Einhorn, he wrote a two-part op-ed piece for the January 3 New York Times. The above-quoted passage was from the first part, entitled: “The End of the Financial World as We Know It”. The second part is entitled: “How to Repair a Broken Financial World”. The first section looked at the Bernie Madoff Ponzi scheme, using it to underscore this often-ignored reality about the Securities and Exchange Commission and its inability to prevent or even cope with the current financial crisis:
In the second section of their commentary, Lewis and Einhorn suggest six changes to the financial system “to prevent some version of what has happened from happening all over again”. Let’s hope our new President, the Congress and others pay serious attention to what Lewis and Einhorn have said. Cleaning up Wall Street is going to be a dirty job. Will those responsible for accomplishing this task be up to doing it?