Last week Rachel Maddow had an insightful piece about big bank swindlers, the Occupy Wall Street and Bank Transfer Day activism movements, and had Barney Frank on to talk about the Dodd-Frank bill. Last night she had another piece about the recent history of massive swindles of the American population, focusing on the Enron scandal which should have sunk the Bush43 Presidency, and the later the 2008 financial system collapse. The cause of both of these problems directly stem from deregulation of the banking and finance system, allowing these institutions to cook the books, make fraudulent transactions, and essentially swindle the population. The response to those problems was to create two regulatory systems, the Dodd-Frank law and the Sarbanes-Oxley law. The current crowd of Republican Presidential Candidates want to undo those laws, repeal them, in effect returning the country to the regulatory system that allowed the Enron collapse and the later general financial system collapse of 2007-8-9.
Under the old system Rachel talks us through a deal between Blockbuster Video and a large energy company who wanted to launch a joint venture with Blockbuster related to online video streaming and sharing. That deal eventually fell through at a loss of $113 million, but that large energy company didn't record it on their books as a loss. That company, Enron, recorded the $113 million as income and was part of the larger cook-the-books fraud committed by Enron.
Enron was a major supporter of the Republican party, to the extent of lending GW Bush the use of their corporate jet during his 1999-2000 Presidential campaign. Enron was also in the room during Cheney's secret energy policy planning in early 2001.
Basically Enron was propped up by accounting tricks in a charade of lies and shell companies. Later in the 2007-8-9 financial system collapse we had a different set of companies running a massive charade of lies, accounting tricks, etc, eventually defrauding the American public of massive quantities of money.
But the Republicans want to undo the modest regulatory stuff that came into being after these problems. So that these kind of problems can happen again?
Let's be real - the actions of these fraudulent were enabled by decades of deregulation. I can't imagine that Dodd-Frank or Sarbanes-Oxley did very much to recreate the necessary regulatory structure required for an honest and open financial and business climate. As Barney Frank said during the prior episode, if the population had been calling loudly enough for tough financial reform, then Dodd-Frank could have done much more.
There have been decades of deregulation and I can't imagine that the Republicans are the only culprits here. Both Democrats and Republicans have been taking payola from the major corporations for decades.
The OccupyWallStreet movement and its sister movement, Bank Transfer Day, are up in arms about banking bailouts, the general state of banks swindling the mass populace, and so on. Part of the anger is at the Dodd-Frank bill. Rachel Maddow had Barney Frank (the Frank in Dodd-Frank) on to discuss protest movements and consumer protection laws.
Maddow started the segment going over the Bank Transfer Day planned protest - and discussing what she calls Banks and other Corporations committing Swindles against all of us. An example was an American aid worker who was in Haiti on the day of the massive earthquake last winter, who shot a bunch of cell phone video uploading it to the Internet so she could tell her friends and family she's okay, and ended up with a $35,000 charge for going over her data plan allowance. A recent regulation change is requiring cell phone companies to notify their customers before committing the swindle of charging for going over data plan limits.
Whether that particular instance was a swindle or not is debatable - but it's true that in general the Corporations and Rich People (the 1%) are continually lobbying to tilt the playing field in their favor, to remove regulations in the name of personal freedom and whatnot but for the real purpose of swindling us - their customers.
I would refer back to something like the establishment of the Food and Drug Administration. Perhaps the food industry feels overly burdened by the regulations, but the food industry also proved a hundred years ago that they're quite willing to sell crap poisoned products they claim are food. In other words - in the Conservative wing of the world they have an ideology of Enlightened Self Interest, and that by removing laws everyone will magically act out of Enlightened Self Interest and make their behaviors benefit others, because they know in Enlightened Self Interest other peoples behaviors will benefit themselves. It sounds great in theory until you remember that there are plenty of people who have zero enlightened self interest, and are instead bent on screwing everyone they can so they themselves can get ahead.
Last night Rachel Maddow's show led off with a powerful piece using Benton Harbor Michigan as an example of authoritarian big government Republicans trampling on local government and overturning Democracy. The issue is a recent law passed by the Michigan state legislature giving their Governor the power to dissolve local governments that are in financial crisis, and replace the local government with a corporate-run management team.
While many such as myself has been pointing at corporatism as an abstract danger, this is a concrete example of corporate power replacing government power.
Her piece asks us to recall the Biblical phrase, "By their fruits ye shall know them". The Republicans have an ideological bias towards small non-intrusive government and personal freedom, but when they have official power they tend to become overbearing authoritarian neo-fascists.
There is an existing industry of Emergency Financial Managers who step in to governments in financial crisis. For that matter this has an analogue in corporate governance where there are people and organizations who specialize in corporate turnaround or dissolving corporations in the final throes of bankruptcy. Some people specialize as being the CEO of flailing companies. So, if there's a city who is in a similar near-failure case it would be useful to have people and organizations that specialize in assisting the financial turnaround of a flailing government.
But this is a little different. Taking cue from the "By their fruits ye shall know them" line, their first action under the emergency financial managers law is a doozy. Benton Harbor is a relatively poor predominantly black city neighboring a relatively rich predominantly white city, both straddling a river along the Lake Michigan shore across the lake from Chicago. Benton Harbor is slated to be the site of an exclusive Golf Course and high priced home development targeted at rich persons. The development is meant to encompass Benton Harbor's shore-side city park. The golf course enclave is obviously not going to benefit the citizens of Benton Harbor, and with their city government out of the way there's almost certainly zero defense against the planned development slated to take over land currently owned by the city.
In other words - the first official use of this law is to negate a local city government to make it easier to build an exclusive rich persons enclave and deny public access to yet another stretch of beach.
By their fruits ye shall know them.
What do you think? Let me know in the comment boxes below.
Step One: If one or more conditions indicative of probable financial stress in a local government exist, the State Financial Authority (State Treasurer or Superintendent of Public Instruction) may conduct a preliminary review, after providing the unit of local government with specific written notification of the review.
Step Two: The State Financial Authority must inform the Governor within 30 days of commencement of the preliminary review whether or not probable financial stress exists.
Step Three: The Governor must appoint a review team if the State Financial Authority informs the Governor that a preliminary review has been conducted and a finding of probable financial stress was made.
A review team consists of the State Treasurer (or his or her designee), the Director of the Department of Technology, Management, and Budget (or his or her designee), a nominee of the Senate Majority Leader, a nominee of the Speaker of the House of Representatives, and any other State officials, or other persons with relevant professional experience selected by the Governor. The Superintendent of Public Instruction (or his or her designee) also is a member if a school district is involved.
Step Four: Unless the Governor specifies an earlier date, or grants a 30-day extension, a review team must report to the Governor within 60 days of its appointment and indicate whether specific statutory conditions exist or are likely to occur which constitute no or mild financial stress, severe financial stress, or financial emergency:
(a) No or mild financial stress exists in the unit of local government if any of the following occur:
-- The review team reports that none of the specified statutory conditions exist or are likely to occur.
-- The conditions may occur, but will not threaten the capability of the unit of local government to provide necessary governmental services.
(b) Severe financial stress exists in the unit of local government if any of the following occur:
-- The review team reports that one or more of the specified statutory conditions exist or are likely to occur.
-- The chief administrative officer of the unit of local government recommends that the unit of local government be considered in severe financial stress.
(c) A financial emergency exists in the unit of local government if:
-- The review team reports that two or more of the specified statutory conditions exist or are likely to occur within the current fiscal year that threaten the future capability of the unit of local government to provide necessary governmental services.
-- The unit of local government failed to provide timely and accurate in-formation to the review team.
-- The unit of local government failed to comply with one or more financial plans.
-- The unit of local government materially breached the terms of a consent agreement.
-- The unit of local government is in a condition of severe financial stress and a consent agreement was not adopted.
-- The chief administrative officer of the unit of local government recommends a financial emergency be declared and the State Treasurer concurs.
Step Five: Within 10 days after receipt of the review team report, the Governor must make one of the following determinations:
(a) The unit of local government is not in a condition of severe financial stress.
(b) The unit of local government is in a condition of severe financial stress, but a consent agreement containing a plan to resolve the severe financial stress has been adopted.
(c) A local government financial emergency exists and no satisfactory plan exists to resolve the emergency.
(d) The unit of local government entered into a consent agreement containing a continuing operations plan or recovery plan to resolve a financial problem, but materially breached the consent agreement.
Step Six: If the Governor determines that a financial emergency exists, he or she must provide written notification to the chief administrative officer of the unit of lo-cal government who may request, within seven days after receiving notice, a hearing conducted by the State Financial Authority or his or her designee.
Step Seven: After the hearing or, if no hearing was requested, after expiration of the opportunity for a hearing, the Governor must either confirm or revoke the determination of a financial emergency.
Step Eight: A local government, with a two-thirds vote of its governing body, may appeal the Governor's determination to Ingham County circuit court. The determination may be set aside only if found to be either:
(a) Not supported by competent, material, and substantial evidence on the whole record.
(b) Arbitrary, capricious, or clearly an abuse or unwarranted exercise of discretion.
Step Nine: If the Governor confirms the determination of a financial emergency, the Governor is required to declare the unit of local government in receivership and appoint an Emergency Manager who serves at the pleasure of the Governor.
Step Ten: Upon being placed in receivership, the governing body and chief administrative officer of the unit of local government are prohibited from exercising any of their powers of offices without written approval of the Emergency Manager, and their compensation and benefits are eliminated.
Step Eleven: Within 45 days of appointment, an Emergency Manager must develop a written financial and operating plan.
In addition to other powers, an Emergency Manager may reject, modify, or terminate collective bargaining agreements, recommend consolidation or dissolution of units of local government, and recommend bankruptcy proceedings.
Step Twelve: A unit of local government is removed from receivership when the financial conditions which were the basis for the underlying financial emergency are corrected in a sustainable fashion as determined by the State Treasurer in accordance with the Act.
Last nights Rachel Maddow show ended with a powerful piece covering the ability of Corporations to commit evil, while the show started with a piece covering Corporate influence in skewing some politicians to benefit corporate interests.
There is a fiction in this country called "Corporate Personhood". That Corporations have various rights of persons and it's been skewing the United States ever since the late 1800's when this fiction was created. You look at a corporation and it's hard to see it as a person, but try driving down the highway and look at the cars on the road and also see that it's a human driving the car. We talk about that stupid car that cut us off almost causing an accident, when it's really the person who's operating the car. We also talk about evil corporations or stupid corporations or corporate influence on politics, without recognizing that there are humans operating the corporations. We also talk about overbearing, abusive or stupid government, when again there are humans operating those governments.
It seems true that when you gather enough humans into an organization, that the organization takes on a life of its own. The people operating the corporation are following certain rules which govern corporate livelihood. These rules include:
the pyramid shaped command-and-control paradigm allowing the board of directors and executive team to hold near dictatorial powers over the actions of their employees (or should we call them serfs?)
the laws of accounting, bookkeeping, finance, securities, investment, and so on
employee rights, marketing, etc
In other words - successful corporations behave within certain parameters. One of the parameters is cutting costs to have the best chance at causing profit. That ideal taken to extremes means cutting so many corners it endangers safety.
In Maddow's piece last night she showed a rapid fire sequence of pictures, airplane crashes, nuclear meltdown, exploding oil drilling rigs, and so on. She was incited by the owners of the exploding oil rig, Transocean, whose Board decided that due to their exemplary safety record (in a year where their oil rig blew up killing 11 workers) they'd award bonuses. This is an extremely shocking fact but the truth is the operators of corporations do stuff like this all the time. They're often able to keep it quiet because corporations are dictatorships with a shroud of secrecy surrounding them, and what's different about Transocean is the scrutiny they're under due to the exploding oil rig.
One of the big challenges of our time is Corporations, operated by people but driven by inhuman rules of corporate behavior, trouncing over all of us.
The history of Corporations has shown time and again that they are willing to sell crap poison products as food, that they are willing to screw everyone, commit any felony, any crime against humanity, in order to make their all-holy profit margin.
The cure Maddow proposes is one I largely agree with. That government has to be there to rein in corporate excesses. If corporations are going to be powerful, then the government which should be reining in corporate power should be as powerful as the corporations.
But ... there's a long rabbit hole of conversation which follows on from that thought, which is best left for another day, or for the comments boxes below the videos. Let me know what you think, below.
This first video dives into the political battle in Wisconson, a state suffering from leadership who's doing the will of corporate backers in trying to destroy unions.
This second video goes over some of the political leadership in Wisconson, the conservative mantra that "government is the problem", and hence their hatred of government, and asking what happens when government hating conservatives get their hands on a government.
This third video is the one mentioned earlier, going over Transocean and their idiotic safety record. The prior videos are great contextualization of this video.
This fourth video was referred to from the previous video. The Transocean announcement awarding bonuses for their exemplary safety record in the year when their corporation killed 11 of their employees when their oil rig blew up, that announcement was sent on April 1. No fooling.
