Posts Tagged ‘Financial Regulation’

July14

Sen. Shelby says: Give Shareholders a Say. Public Citizen says: Right on!

By: Bartlett Naylor

By Bartlett Naylor and Carl Wilhjelm

One troubling mystery of the financial crash of 2008–the one that’s mired our economy in 9 percent-plus unemployment, etc.–is why shareholders let it happen.

After all, we’re supposed to enjoy an “efficient” market, all wise to current and future events, and since the shareholders own the companies, why didn’t they see the wreck coming?  After all, we now know that many of the managers did see it coming. They cashed out, as in the case of Countrywide’s Angelo Mozilo and the top brass at Lehman Brothers, or golden-parachuted out, as in the case of Merrill Lynch CEO Stanley O’Neil, who was punished with $160 million for failing to deal with the crisis.

To the policy rescue comes . . . wait for it . . . Sen. Richard Shelby, ranking Republican on the Senate Banking Committee, and otherwise ranking complainer about the new Dodd-Frank Wall Street Reform Act.

“Who owns a corporation,”  Sen. Shelby asked rhetorically at the close of a hearing July 12 before the Senate committee. “The shareholders,” he answered himself. “We need to create conditions where a corporation cannot be hijacked by management or special interests,” the Alabama former Democrat implored.

With Shelby’s injunction, the other senators and seven esteemed witnesses generally agreed. As do we. And several witnesses even offered specific ideas on how to implement Sen. Shelby’s principle. Barbara Roper, Director of Investor Protection of the Consumer Federation of America, testified that we need stricter oversight of the ratings agencies, so that their ratings will actually mean something to investors.

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Posted in: Congress, Financial Reform0 comments

April6

The Big Shill

By: Bartlett Naylor

The following originally appeared in The Hill.

A shill is a person who helps another person or organization to sell their goods or services, without disclosing his or her close relationship with the seller. Coincidentally, the term dates back roughly to 1913, the same year Congress established the Federal Reserve System.

Last week, former Fed Chairman Alan Greenspan resurfaced to opine in the Financial Times about purported deficiencies of the new Wall Street reform law, which is aimed at reigning in reckless banking. Instead of owning up to the many failures that led to our global financial meltdown, Greenspan gushed with praise for the free-market system, insisting that regulators are incapable of monitoring private markets and regulations are impeding economic recovery.

Greenspan identified himself simply as the former Fed Chair. He didn’t point out that he has deep industry ties, including a consulting contract with Pimco, the world’s largest bond fund manager.

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Posted in: Campaign Finance, Financial Reform, Uncategorized0 comments

April4

Martin Luther King, Jr. Remembered

By: Rachel Lewis

On April 4, 1968, an activist touchstone, a leader who set a tone of nonviolence that would come to define the work of progressive organizations for decades to come, stepped out onto the balcony of the Lorraine Motel in Memphis, Tenn.  Seconds later, he was assassinated.

King was in Memphis for his second event to aid sanitation workers who were on strike. According to History.com,

In the months before his assassination, Martin Luther King, Jr. became increasingly concerned with the problem of economic inequality in America. He organized a Poor People’s Campaign to focus on the issue, including an interracial poor people’s march on Washington . . .

One could only wonder what King would have had to say to the CEOs of Wall Street who Public Citizen’s Bartlett Naylor recently wrote a report about in, HOURLY RATES: A Modest Essay on Extraordinary Paychecks, or the WeAreOne nationwide labor rallies today.

Unfortunately, Martin Luther King Jr. is not here to comment, but the words he said live on in the minds of all of us who believe in equality and justice.

Today, in memory of him, here are a few quotes of King’s that still resonate today. We hope you find in them inspiration to continue standing up for what is right.

“Our lives begin to end the day we become silent about things that matter.”

“Everything that we see is a shadow cast by that which we do not see.”

“History will have to record that the greatest tragedy of this period of social transition was not the strident clamor of the bad people, but the appalling silence of the good people.

“I submit to you that if a man hasn’t discovered something that he will die for, he isn’t fit to live.”

“Almost always, the creative dedicated minority has made the world better.”

Posted in: Activism, Midmorning Refill, Uncategorized2 comments

April1

Haha, another April Fool’s joke. This time it’s on Timothy Geithner!

By: Bartlett Naylor

You may not believe this email string with Geithner . . .

Following publication of “Hourly Rates: A Modest Essay on Extraordinary Paychecks,” the following email string appeared on my computer. As such, it reads from the bottom up.

From: bnaylor@citizen.org
To: Timothy.Geithner@do.treas.gov
Sent: Thursday, March 31, 20118:52 PM
To: Timothy.Geithner@do.treas.gov
Subject: FW: A Modest Essay about Extraordinary Paychecks

I’d need to check with my superiors. Will relay tomorrow.  Many thanks, again.

From: Timothy.Geithner@do.treas.gov
Sent: Thursday, March 31, 20118:49 PM
To: bnaylor@citizen.org
Subject: FW: A Modest Essay about Extraordinary Paychecks

Any names, in particular?

From: bnaylor@citizen.org
Sent: Thursday, March 31, 20118:48 PM
To: Timothy.Geithner@do.treas.gov
Subject: FW: A Modest Essay about Extraordinary Paychecks

LOL. With a stroke of your pen, you can name a pro-reform, enlightened leader to head the OCC. Need I detail our concerns with the national bank supervisor? You can name the person “acting.” No need to get them past Shelby. (We have other ideas on how to do that.)

From: Timothy.Geithner@do.treas.gov
Sent: Thursday, March 31, 20118:35 PM
To: :bnaylor@citizen.org
Subject: FW: A Modest Essay about Extraordinary Paychecks

Right. Let’s say your report rubbed me the right way. Tell me something I can do-accomplish-tonight?

From: bnaylor@citizen.org
Sent: Thursday, March 31, 20118:30 PM
To: Timothy.Geithner@do.treas.gov
Subject: FW: A Modest Essay about Extraordinary Paychecks

Three wishes, as in a genie in the bottle?  Solve moral hazard. Dodd-Frank takes important steps, but our large banks are even larger than before the crash. You can declare large banks systemically risky and order a breakup. Reform executive compensation to remove the incentive for risk-taking.  Wage an immediate public battle to fund fully the agencies and appoint a strong leader of the new Office of Financial Research.

From: Timothy.Geithner@do.treas.gov
Sent: Thursday, March 31, 20118:24 PM
To: bnaylor@citizen.org
Subject: FW: A Modest Essay about Extraordinary Paychecks

No time. I’m in the mood. You have three wishes.

From: bnaylor@citizen.org
Sent: Thursday, March 31, 20118:18 PM
To: Timothy.Geithner@do.treas.gov
Subject: FW: A Modest Essay about Extraordinary Paychecks

Public Citizen promotes a robust agenda. Given your position, perhaps there is a time when a delegation from Public Citizen along with our coalition umbrelled as Americans for Financial Reform could meet.

From: Timothy.Geithner@do.treas.gov
Sent: Thursday, March 31, 20118:16 PM
To: bnaylor@citizen.org
Subject: FW: A Modest Essay about Extraordinary Paychecks

You can cut the honorifics. So what are your policy ideas?

From: bnaylor@citizen.org
Sent: Thursday, March 31, 20118:10 PM
To: Timothy.Geithner@do.treas.gov
Subject: FW: A Modest Essay about Extraordinary Paychecks

Mr. Secretary
I am flattered you took the time to read the report.  Public Citizen’s Congress Watch published this as a vehicle to help me reach out to leaders on the important subject as we navigate policy.

From: Timothy.Geithner@do.treas.gov.
Sent: Thursday, March 31, 20118:01 PM
To: bnaylor@citizen.org
Subject: FW: A Modest Essay about Extraordinary Paychecks

One of my aides forced me to read your report on high pay in the financial sector. I sense you don’t approve of a $5 billion annual salary. But you don’t actually say that. In fact,, you have no policy prescriptions at all.

Bartlett Naylor is financial policy advocate for Public Citizen, and former Chief of Investigations for the U.S. Senate Banking Committee.

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March18

Meet Steve Harris

By: Bartlett Naylor

Months before the failure of Lehman Brothers, which collapsed when the markets learned its mortgage-related securities were breathlessly overvalued, Ernst & Young awarded Lehman an unqualified opinion for its accounts.

Months before the government bailed out AIG because of massive exposure to bad bets in exotic derivatives, PricewaterhouseCoopers assured investors that AIG’s books were completely solid.

Months before the bankruptcy of Washington Mutual, Deloitte assured investors the balance sheet suffered no blemishes.

These auditors clearly betrayed the investor confidence they were hired to foster.

Much must be reformed in this arena, and many responsible, informed and well positioned people intend to do so.

Steve Harris hopes to translate these good intentions into tangible reform. Harris serves as member of the Public Company Accounting Oversight Board. On March 16, he convened a meeting of the PCAOB advisory group to plot reform. These minds included SEC Chair Mary Shaprio;  Brandon Becker of TIAA-CREF, former market regulation chief of the SEC; Lynn Turner, former chief accountant of the SEC; Judge Stanley Sporkin, former SEC commissioner; Ann Simpson, investment officer of CalPERS; Ann Yeager, director of the Council of Institutional Investors; Damon Silvers of the AFL-CIO;  and many others.

Harris himself brings stellar if unsung credentials. He directed the staff of the Senate Banking Committee under chairmen Sarbanes and Riegle. The strength of the Sarbanes-Oxley Act in correcting the ills exposed by the Enron scandal owes much to Harris’ steady political and policy hand.

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Posted in: Financial Reform, Uncategorized0 comments

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