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Weapons of Mass Distraction – Congress Brings CEOs to Town

October 7, 2008

The rescue package has been passed. May the blame game begin. Yesterday, the first round of CEOs was brought before Congress to be grilled about their role in the current financial crisis. Our Congress-people were full of fire and brimstone, grilling former Lehman Brothers CEO Richard Fuld about his personal gain while the markets failed. Henry Waxman lead the charge, slamming Fuld with statements like:

“It seems that the system worked for you, but it didn’t seem to work for the rest of the country and the taxpayers who now have to pay up to $700 billion to bail out our economy,” Waxman said. “We can’t continue to have a system where Wall Street executives privatize all the gains and then socialize all the losses.” 

and

“Your company is now bankrupt, our economy is now in a state of crisis, but you get to keep $480 million. I have a very basic question for you. Is this fair?”

Well, I’m certainly comforted. Comforted, at least, that business as usual is returning to Washington. Although Waxman’s figures may be about $200 million high, and there is no mention that the money was made over the span of 8 years, the answer to his question is obvious. Of course it’s not “fair”. But I am amazed at how easily we have allowed our attention to be misdirected by this attempt to bring a sense of “fairness” to the whole situation.

People around the country are now chanting for these CEOs to be “held accountable” for their actions. But what everyone seems to be forgetting is that there really isn’t much we can hold them accountable for, because the shady investments they made that caused the crash are not illegal. They aren’t illegal because the markets they were trading in (the same ones that have fallen into a state of disaster) were unregulated. As such, the hearings are little more than a perp walk for criminals who broke no laws.

But they are a great way for Congress to turn the anger of the American public on someone else. The more angry we are at CEO greed, the less likely we are to pull back the curtain and realize that Congress shares an equal, if not greater, amount of responsibility for what happened. By allowing unregulated trading in markets that were speculative by their very nature, the culture of corporate greed was nearly sanctioned. Are we really surprised that Wall Street moguls took advantage of a system with no rules in an attempt to make as much money as they possibly could? They were hired to make as much money for the company as possible. As investors, we demand it. These firms made this money by taking advantage of the system that was presented to them. Unfortunately, while they may have done so in ways that were irresponsible, it is likely that these methods were not illegal. So Congress is holding hearings in an attempt to put a face on the anger of the taxpayer …just as long as that face isn’t anyone in the government that allowed the market to exist with no rules or oversight in the first place. I’m certainly comforted.

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