In an interesting book entitled "Systems of Belief," the author contrasts
the "Commercial" mindset against the "Guardian" (government) mindset and
finds that the two do NOT agree. Things held in great esteem by governments
(force, secrecy, pomp, cooperation (CYA), distrust) do NOT work in the
Conversely, things that work in the commercial realm (trust, dissent,
incentive, innovation) do NOT work in the government realm.
It's not unusual, then, for the government to look askance at how private
companies pay their employees. Payment based on performance (i.e., school
teachers) is simply wicked.
If the government paid its workers on performance, say a bonus for traffic
tickets written, there would be an uproar. Likewise, it's hard to find a
salesman that DOESN'T get a commission or bonus for sales. Government people
don't understand commissions and commercial people can't stomach pay for
just showing up.
The problem, then, is when an entity - government or business - tries to
employ a tactic, solution, or goal usually found in the other realm. A
corollary to that is a person with experience in one field trying to make it
in another. That is, someone running for their first office on the basis of
being a "successful businessman" is almost guaranteed to be a disaster.
There are exceptions: Mitt Romney was a successful businessman, but came
from a political family and had experience with large, quasi-governmental
affairs (the Olympics) before he became governor of Massachusetts. Gerald
Ford spent his life in politics but made a nice living afterward by serving
on boards of directors.
And, of course, ex-politicians enter the fairy-world of lobbying (which,
like the Mafia, is an interesting bastardization of both civilizations).
While there's clearly some truth to what you are saying, I was responding to
the specific, oft-repeated, easily refuted claim "The CRA caused the entire
Greater Depression." There were many players. A good summation can be
no, wait, that's the URL about enforcement actions brought about by
violations of the CRA. I'll get to that.
Here's Time's list of the 25 biggest party crashers.
Phil Gramm, Bush II AND Clinton, the FHA, Angelo M., Dick Fuld and even the
American consumer. I just naturally sort of recoil when I hear claims like
"The CRA did it!" that just don't add up when you look at the pieces --
it's VERY important to do that post-mortem to determine what went wrong. We
may even determine there's nothing we can do to counter the boom/bust cycle.
and that it's a natural process, just like hurricanes and just as
In this case, everyone wanted to climb on the bubble on the way up and no
one wanted to fall off the bubble on the way down.
I can't see blaming Congress for the runaway corporate compensation. That's
been happening for a long time because boards select compensation
consultants that are adept at justifying some honcho making 200 times or
more what a common worker makes. Not one of these guys is worth what they
are paid except perhaps the original founders of a company like HP because
they were true entrepreneurs and not second string caretakers.
Now, corporate execs get what they do because no one can stop them. It's
all part of the "Good Ole Boy" system at the top where Presidents appoint
former Wall St. honchos and tax cheats like Tim Geithner to become
government bosses and the first thing they do is flip $40 billion in tax
payer money to their old buddies to "avoid a meltdown" (which seems to have
happened anyway). The system is breathtakingly corrupt down to the rusty
Obama and Bush have both rewarded Big Business, which caused this mess,
instead of letting them fail, free-market style, and have just made life
harder for the small businesses that have been the source of new jobs in
America for decades.
We won't get out of the hole we're in by richly rewarding the people that
pushed us into it, but that's what we are doing. Bush, the champion of the
free market, was the first to write the big bailout checks to the banks but
he won't be the last. Very little will change because banks have so many
lobbyists and plain old folks have none. No one is barraging the Congress
with reminders that small businesses are the seedlings of greatness, and we
just cut off their water and sunlight to feed the huge beasts that will bury
Bzzz! You're talking about what "might" have happened - in a million
"All they had to do" never happened. To cite it as a factor is
Here's some information about the woefully toothless CRA act:
Virtually NO enforcement powers whatsoever. Read it. Pelosi and Frank
weren't going to "scare" banks into making loans they didn't want to make to
people they didn't want to make them to. It didn't happen nor would it EVER
happen. The act had no enforcement power.
I can't understand why people are still making such claims about the CRA.
They fall under the heading of plain lies. There are so many ways to
disprove the lies it's almost laughable to still hear them being made.
But I would be interested in hearing refutations of the statements of
judicial record. Remember, they need to be factual ones and not events that
never happened. That means you DON'T get credit for remarks like "all they
had to do" when it's clear that they did no such thing. Here's the truth
about the CRA:
"The court stated that "[t]he CRA itself does not provide for any sanctions
for an unsatisfactory record, nor does it even define what an unsatisfactory
record would be. The CRA merely requires that the Board assess an
institution's community credit record and consider that record when
evaluating branch applications."
It's bizarre to see a toothless 30+ year old law being blamed for the
economic collapse when it's so clear where the fault lies. With AIG selling
insurance it couldn't back up, with outfits like Countrywide making "no doc"
loans and with the American consumer, falling all over themselves to suck
out the equity of their houses to buy cars, campers and flat screen TV's.
Those acts constituted so much more of the collapse that it's preposterous
to blame the CRA for being much more than a bystander in the slaughter of
But I am waiting anxiously to hear how instead of following naked greed and
the ability to pass off the risks of bad mortgages to investors via CDO's,
banks gave away money to poor people because the were SO afraid of Barney
and all the other Congress critters.
Afraid enough to give Dodd (and lots of others who might pass laws to rein
them in) interest free mortgages.
Afraid enough to get them to repeal Glass-Steagall.
Afraid enough to prevent Congress from regulating these wonderful new
financial products until they brought the house down.
The unvarnished, un-Limbaughed truth is that the banks weren't afraid of
anyone. Not Pelosi, not Reid, not Frank, not anyone.
It doesn't make sense to blame the CRA, and as Judge Judy says, if it
doesn't make sense, it usually isn't true.
Ah, but several government agencies DID go to individual lenders and insist
that they do a better job of "serving the under-served" or face regulatory
ruin. Subprime loans were only PART of the problem. Drive through a
disreputable part of your town and I'll be you'll find a branch of Bank of
America, Wells Fargo, or Chase. They, the hookers, and the crack dealers
will be the only retail establishments on the block.
Agreed, but the CRA was only part of the wedge. And the "Bush" to whom you
refer was the one that signed the 1977 original legislation. It was his
successor, Bill Clinton, who vamped the 1995 massive expansion of the CRA.
No, the CRA is an example of OVER-regulation. It was the CRA, and
accompanying regulations that mandated certain percentages of loans to
"disadvantaged" borrowers as a condition of a lending institution being able
to remain in business.
There was also a round of amendments involved with Glass_Steagal
repeal where Community Activist types could intercede to the Fed (and
maybe FDIC) when those agencies were looking at mergers and
acquisitions. Banks were essentially extorted by the activists into
making promises that went way past the CRA or face long regulatory
Actually there were something like 5 different times between 77 and
08 where the Congress made major changes in the law and 4 times when
FDIC, Fed or others made major changes to the regs.
I want to find a voracious, small-minded predator
and name it after the IRS.
On Thu, 17 Jun 2010 20:20:33 -0500, " email@example.com"
A "real" Nigerian Prince, documented in Federal court (Miami) ,
accused me of brutality.
After all the facts were obvious. I beat him to save myself. (dat sum
beach has teeth)
He dropped his complaint and understood what a prison is like in
I only learned he was a Prince, after I body slammed him with several
punches to his nut sack.
A retiree can't buy groceries and you are "concerned" about what MIGHT
Explain to me how preventing BP from paying its quarterly dividend has any
effect on your "concerns" for the safety of your food supply.
We KNOW that $400 million will NOT go to the participants in New Jersey,
California, and Texas retirement funds. We KNOW that billions more will not
go to individual retirees so they can buy (perhaps tainted) food.
This notion of unthinking Draconian penalties for transgressors irrespective
of the collateral damage to the innocent is my complaint.
Another complaint is the knee-jerk reaction to suspend all oil drilling in
the Gulf of Mexico. Another 45,000 people immediately out of work, 33 oil
rigs idled, hundreds of thousands of downstream jobs lost.
At least with Bill Clinton's administration they had Lloyd Bentson as the
designated adult. All the current administration has is a couple of folks
who play adults on TV.
If a retiree's income is so closely tied to just ONE of their investments,
they made a terrible investment mistake.
It really doesn't, but if the company becomes insolvent, it's
that it may claim it can no longer afford any further cleanup efforts, and
it can't afford to reimburse the people whose livelihoods have been
eliminated by the disaster.
It's likely that the $300 in a BP divident payment, along with five other
dividend payments of an equal amount, will put a strain on an elderly
couple's finances. If this couple has been earning $1800 every quarter from
six diversified stocks, bonds, REITs, or whatever, they may have to give up
Wednesday night Bingo.
Still, there are those who say flushing one-sixth of the nation's economy -
or one-sixth of granny's - is no biggie.
In general, you are correct. But failure doesn't apply in BP's case.
1. In BP's case, selling off their assets would cover, several times over,
mitigation of even the worst situation.
2. But #1 won't happen, because BP is too big to fail. The U.S. government
would step in with grant money, loans, or stock purchase to keep the company
Besides, YOUR food supply can be rearranged to be harmless - just quit
Never mind the money. Nobody from BP should be allowed to perform ANY
function related to oil - not even gas up their own cars, until every single
employee is tested for drug use.
You'll love this:
BP's gulf oil spill response plan lists the walrus as a local species.
It's a very good one, too. But things might change. The judge in the Bank
of America/SEC case refused to punish shareholders because they had nothing
to do with the bad decisions that cost BOA so much money.
Corporations (now equal to private citizens - thanks to Judge Roberts) are
excellent shields against personal responsibility. As the judge asked: Who
took these actions that resulted in so much loss? Ghosts? No, it was
corporate officers knowing that if they screwed up, the *shareholders* would
pay the fine, not them.
As you point out, that has to change. The people that pushed the buttons,
the people that pushed past the safety features, the people that made the
bad decisions that led to the disaster: They are the ones that need to be
punished as an example to others. They need to be punished so the next time
some suit says to the safety chief "bypass that overload device" the safety
chief says "I am not going to jail for you."
That's the only way meaningful change will occur. By stopping that buck
where its passing caused all the trouble.
I understand what you are saying that are some people that depend on their
from they investments, however I also believe that is very small number
to the people that will or have lost their livelihood and they future
On other hand one must look at majority and not on individuals.
We have soldiers going into war for security and better of our lives
and yet they are ding every day for what?
You can apply many different scenarios it should always come down
who is effected by tragedy most or who gain.
Perhaps those that loose they dividends can afford it compare to
what is going on and more to come, even if BP is to go Bankrupt
it will not compare to the loses caused by oil spill!
Your point is well taken. The pension funds of California, New Jersey, Texas
and some other states are heavily invested in BP stock. One estimate I saw
was that 40% of the pensioners in the UK receive BP dividends. Together,
that's easily 50 million people. The number of fishermen in the Gulf don't
even approach 1% of that number.
Not really applicable, but they are dying as the risk of their vocation.
Like a mountain climber or race-car driver or even a sky-diver. Each soldier
knew the risks when he or she signed up but was willing to take the chance
for the thrill incumbent with the activity.
If this disaster gets swept under the rug, tony gets his life back and
BP doesnt pay the ultimate price, bankruptcy and getting sold off
piece by piece never to exist again.
the dont complain when the next disaster is a melted down nuke plant
making a big chunk of our country a no human zone for a 100 thousand
years and a global rise in cancer rates.
or a bio engineering firm has a leak of a new life form that freed
from the lab kills millions.....
companies need to be punished when they make big mistakes like putting
profit over safety.
kill BP may well save us from the next disaster
What's your evidence that "paying the ultimate price, bankruptcy"
works? Remember Enron and WorldCom? Not only did they go bankrupt,
but the executives received lengthy prison terms and Ken Lay died of a
hear attack. Yet they were followed by more recent financial
trickery at Lehman, AEG, Bernie Madoff, etc?
In the case of the recent corporate bankruptcies, eg Lehman, the only
ones to get really punished were the shareholders who lost
everything. The executives were out a job, but only after collecting
years of exec bonuses amounting to hundreds of millions based on
profits generated by taking huge risks that ultimately directly lead
to the bankruptcies. And I wouldn't be surprised to see many of them
showing up at other businesses before long.
I'm not saying that corporations shouldn't be penalized for doing
wrong. Only that there isn't much evidence that it works. In fact,
I would argue that it's getting much worse due to the fact that moral
standards in general are in decline in the USA A few decades ago, if
you filed for bankruptcy, especially personal bankruptcy, it was a
disgrace and to be avoided. Now, it's being treated like just a
normal course of every day life. And the bankruptcy part I can
understand. When the govt hands out taxpayer money right and left to
bail out any company it chooses, why shouldn't Joe six pack think that
walking away from a mortgage because it's upside down at the moment is
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