The day after the you the taxpayer bailed out insurance giant AIG with an $85 billion line of credit, the company took independent sales people of their products to a California spa for more than $400,000 in massaging, soaking and feasting.
A couple of days ago, unapologetic AIG executives went before Congress and explained that the expensive getaway may have been poorly timed. That was it. Congressional members railed at the execs in front of the TV cameras so constituents back home could see. And then the hearing was over. Nothing changed. No one dared.
Then, the following day, the federal government issued a $38 billion gift to AIG to keep operations going. The sum came from the $850 billion bailout passed by Congress. The $38 billion gift was like giving a child who had just wrongly taken a cookie from the jar before dinner the whole container afterward.
Accountability be damned.
Politicians of both parties say we have to first solve the problem before assessing blame. But you can't fix the problem without knowing what caused it -- not just now but for the past 25 years.
As one analyst said this morning on CNBC, the cure may be worse than the disease. And the markets around the world are acting on that truth, including the Dow which fell almost 700 points today.
What will give the American people confidence and trust to invest again and spend more to turn around economic fortunes?
We want someone to hang.
We want some thing, or some officials or some industry to pay a heavy penalty.
We want a politician or politicians to be outed and ousted.
We want the U.S. Department of Justice to sue parachuted-executives, forcing them to return money they stole from companies now being bailed out by you and me.
And we want someone in Washington who should have warned the American people about this coming calamity to be fired. George W. Bush's exit from office is not enough.
No action.
No trust.
WALKING THE WALK
Like a lot of Americans, state Rep. Frank Buck and I were talking yesterday about this mess and why there was no accountability. We tried to piece this puzzle together with things he and I had heard on TV and seen on Main Street.
Each TV network gives a different version based on ideology and whom they want elected president. But this crisis is bipartisan. The mess is rooted in simple greed by both parties to ensure re-election and self-enrichment.
Rep. Buck knows a lot about accountability. He was virtually the sole voice demanding accountability at the Tennessee General Assembly on the big money game there. He pushed ethics legislation and was rebuked by legislative leaders and the current governor.
Of all the elected representatives I've covered as a journalist in three states and all the way to the White House, Buck stands above all when it comes to integrity and serving the people first.
He's angry like you and me. And he is searching for whom or who or what to blame.
A CONDEMNING CHRONOLOGY
Noted and non-partisan author Kevin Phillips laid out a chronology of wrongdoing by Washington, Wall Street and Main Street on an appearance two weeks ago on Bill Moyers' PBS show. I've added my knowledge to the chronology and my personal experiences. Send in your own, and I'll add them to finish the puzzle.
The 1980s: Both political parties came to the rescue of the errant savings and loan industry, setting a bad precedent of bailing out a single industry looking to make a quick and big profit. And Sen. John McCain was one of "The Keating Five", a group of senators accused of wrongdoing in supporting one thrift wrongdoer.
The 1990s: Republicans were replaced by Democrats in the White House. But the Clintons were different donkeys. Remember, they made $200,000 in hog futures. These Democrats liked making big money and making friends of people with deep pockets. Guess what Chelsea Clinton now works for: a hedge fund -- the pirates of Wall Street.
So it was no surprise that President Clinton ushered in significant deregulation of the financial industry, allowing banks to do business with Wall Street firms when it came to making money off home mortgages. Republicans, who wanted no regulation on supposed free markets, were more than happy to go along.
A year before with passage of the Community Reinvestment Act of 1997, the Clinton administration pushed more home lending to neighborhoods red-lined by bigoted bankers. The poor and minorities lived there.
While such policy was morally right in helping more American achieve the American Dream of home ownership, many bankers saw it as a way to make another quick, big profit. And the victims were people who could not afford the kind of homes bankers said were in their income levels. Monthly payments were brought down to affordable levels through the use of adjustable rate mortgages. Low payments in the beginning would triple later. The collateral for the loans would be the rising home prices bankers counted on.
But something happened.
The 2000s: George W. Bush entered the White House and the shenanigans continued. But any hope of anyone taking notice and sounding the warning was quashed with 9-11. The national focus was on terrorism, Afghanistan and then Iraq.
The financial markets dipped sharply in 2001. Smaller setbacks came in 2003 and 2005. The ongoing bear market began in the fall of 2007.
There were definite warnings signs at the beginning of this year. Mounting home foreclosures were an issue in the Iowa caucuses. Fannie Mae and Freddie Mac were bailed out for $200 billion by the federal government. These private entities hold most of the home mortgages in this nation as the outright owner or in partnership with other financial institutions. Since the entities were created by Congress, everyone assumed that the Feds would bail them out if loans went bad. And they were right.
But the bailout could not stop the inevitable reckoning. Something did happen. The value of homes quit rising to provide the collateral for the loans. Dropping values accelerated with each month. And more and more loans turned bad.
Ultimately, the problem became too big. The banks had sold all these bad loans up the financial stream to Wall Street, where a quick, big profit was the norm. Now the virus had gone nationwide and throughout the financial body. These financial instruments that have sunk the financial markets are called "derivatives". A better name is "poison".
Democrats led the bailout effort of Wall Street because they get more campaign contributions from there than Republicans.
Fall 2008: Now get ready for the other financial shoe to drop. If home mortgages were not enough profit, many of the nation's big banks wanted even more money off the vulnerable and started aiming credit card solicitations to people who they knew could not afford new debt. Getting these financial carcinogens into Main Street households was super easy. And to make matters worse, the campaign of greed was aimed at young people who did not know better.
The result was $4.4 trillion in personal debt, a quadrupling of the $1.1 trillion in debt 25 years earlier. Now that's a wild party of buying.
This riotous living by both banks and consumers should have grabbed the attention and elicited the ire of mainstream religious leaders in a nation under God. But something called the Gospel of Wealth gained widespread belief at the end of the century and the beginning of the next.
It taught:
God wants people to be awash in the treasures of this world. He wants us to create heaven on earth. And those without must be doing something wrong in God's eyes. Bring on more punitive welfare reform and put mothers to work. Kick out the homeless, fill up the prisons and stop the drug rehab clinics from locating nearby. Make these people pull themselves up by their bootstraps like we did. God really loves us, because we're wealthy.
Bizarre.
ACCOUNTABILITY WITH ACTION
Here is what must be done:
1) Demand the firing of all executives for all the Wall Street firms that will receive bailout money. No firings, then the firm gets no taxpayer money.
2) Demand reimbursement to company balance sheets all bonuses and golden parachutes funded during 2007 and 2008. How can companies needing a bailout return money to their balance sheets? Take the bonuses from current employees' salaries or pension funds and sue former executives. Companies employ sets of attorneys. Make them work weekends and evenings on these legal actions. Pursue punitive damages for shareholders. Eat up the wealth of the former execs with legal fees. Those wrongdoers might negotiate giving up much of their holdings just to keep from having their money tied up and declining for years.
3) Forbid bailout money from going to firms that made patently wrong decisions for the financial times at hand. We do the same in forbidding federal money going to colleges that set racial restrictions on enrollment. Who would judge the decisionmaking? People without titles, taxpayers, those who are paying for the bailout.
4) Remove from law the bankruptcy legislation pushed and supported by Sens. Biden and Clinton that allowed credit card companies to more aggressively and successfully go after the holdings of Main Street people in court. That reversal will be the price credit card companies must pay for their immoral marketing of cards to people -- particularly the young -- who could not afford such debt at 20% interest rates.
5) Call a national day of prayer. Let the nation's religious leaders get off their hands and preach to the people in the pews against unbridled greed and buying. Then ask for God's mercy on our wrongs, because the next four years are going to be very difficult for people at the bottom -- and even those in the middle.
Here is a note of warning to Wall Street, Congress, Treasury Secretary Paulson and Obama and McCain:
The American don't trust any of you one damn bit. There will no sense of public confidence in the markets or the economy to invest and spend until someone or something is held accountable and made to pay.
No action. No trust. No Wall Street turnaround. No re-election.
If we have to suffer, so should you.
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