Corporate America Gets a Bail-out Bonanza

Is there a larger, more exploited, defenseless group of undifferentiated Americans than the 133 million individual federal income taxpayers? Their dollars are used to subsidize organized corporate interests, giveaway taxpayer assets like minerals under the public lands, and bail out speculative, self-enriching corporations and their crooked bosses.

As large corporations, and their trade associations, complete their takeover of the federal government -- a process that President Franklin Delano Roosevelt called fascism in 1938 -- the corporations become the government.

Just look at the recent headlines in the business press. Article after article features abuses and over-runs by companies contracting with the Department of Defense and other agencies. The enormous volumes of waste, fraud and poor delivery affecting the Iraq war-occupation now only produces ho hum newspaper and television stories.

Recently, the student loan scandals, exorbitant burdens on students graduating from college imposed on them by companies with influence in Washington, like Sallie Mae, whose government guarantees make a mockery of capitalism, have riled members of Congress to some modest action.

Once again this year, the big boys on Wall Street stretched the envelope of risk and greed and ran down to Washington, D.C. to be bailed out by the accommodating Federal Reserve. Chairman Ben Bernanke testified before the Senate that he had no choice but to take on about $30 billion of Bear Stearns obligations or there could be a run on other big banks. Where was the Federal Reserve when this credit, debt and risk spree was building during the past five years?

There is no penalty for failure -- whether on Wall Street or in Washington, D.C. for misusing or wasting the taxpayers' monies.

When the heads of Citigroup and Merrill Lynch were asked to leave their positions recently as CEOs after tanking their companies' shares, they could barely avoid tripping over the many millions of dollars they were taking with them through the exit door. Among many perverse incentives operating within these Wall Street firms, there are rewards for failure -- big bucks rubber-stamped by the look-the-other-way, well paid Boards of Directors.

Back in 1971 and 1980 respectively, the White House proposed a $250 million loan guarantee for Lockheed corp., and a $1.5 billion loan guarantee for Chrysler with the government taking back warrants that it later sold for a profit. There was intense debate and discussion at public hearings in the House and the Senate before they authorized the guarantees.

Now federal agency bailouts of big business, even Mexican oligarchs, rarely seek Congressional approval. Just have the Executive Branch do what it wants. No public hearings. Midnight bailouts without transcripts.

I asked a powerful Senator: "What are the discernable legal limits on the Federal Reserve's bailout authority and how much total risk can the Federal Reserve heap on the taxpayers?" "Can they go to a trillion dollars?" He did not know.

Shifting deficits, debts and unfair burdens to individual taxpayers while the rich and powerful become either tax escapees or big time welfare recipients keep pushing a limitless envelope on today's and tomorrow's taxpayers.

The New York Times' prize-winning reporter David Cay Johnston, has written two books "Perfectly Legal" and just recently, the best seller "Free Lunch" that document these megatrends of corporate socialism -- privatizing corporate profits and socializing corporate losses on the backs of individual taxpayers.

What can be done about these gigantic runaway sprees?

First, pass legislation that broadens individual taxpayers' right to sue in federal court against waste, fraud and abuse, including those receivers of bailouts -- the reckless, avaricious corporations who have Uncle Sam in their back pockets.

Second, have a voluntary checkoff on the 1040 tax return inviting individual taxpayers to join their own taxpayer defense organization. Such a group would have millions of small dues paying members and an on-the-spot skillful watchdog group in our national capital.

Finally, place our public elections off the private auction block and have them funded by well promoted voluntary checkoffs on the tax returns together with a certain amount of free radio and television time for ballot-qualified candidates seeking federal office.

These and other proposals, such as giving shareholders more power to restrain their top executives, will give taxpayers some grip on the wide-open spigot of taxpayer dollars delivered to the misfits of the giant corporate world.

Bad Mouthing De-regulation

It was at a large wedding reception in New York City that I saw Chairman of the Federal Reserve, Alan Greenspan, sitting down to dinner one spring evening in 2000. Having heard on the grapevine that the Federal Reserve was finally going to do something about predatory lending--an area of enforcement under their jurisdiction--I went over to his table and asked him this question:

"Mr. Chairman, I hear that you are going to crack down on predatory lending practices." He nodded and said quite firmly, "Yes, Enough is Enough." Since it was, after all, a social occasion, those words were enough for me and I returned to my table with the good news. For years, my associates, Jon Brown and Jake Lewis, had been working to document the prevalence of predatory lending and communicate our concern to the federal banking agencies and members of Congress.

Jon Brown developed detailed computerized maps of bank redlining in low-income areas, city by city, which were geographic guides to places where there were plenty of predatory lending practices.

As it turned out, Chairman Greenspan's Federal Reserve did nothing about either traditional predatory lending or the rise of the latest version of that abusive pattern--the now notorious sub-prime mortgage scandals and mega-losses that are shaking the financial industry to its foundations

Actually, Mr. Greenspan often lauded leveraged, collateralized sub-prime lending as helping lower-income people to get home mortgages. He did not give much weight to the deception and imprudence and gouging of the lenders lurking in the fine print and flowing from the silver tongues of the salespeople.

The Federal Reserve touts itself as the agency where lots of smart people work - economists, statisticians, forecasters--and, of course, the often-described very smart Chairman. Yet as the speculative greed that developed, sold and resold ever more abstract and risky financial instruments comprised of bundled home mortgages went toward its final orbit of collapse, these "best and the brightest," failed to act. They failed to regulate.

The business assault on regulation and its drumbeat demands for de-regulation over the past quarter century have now caused a burgeoning sub-prime mortgage collapse that is producing hundreds of thousands of home foreclosures. The housing market is plummeting. Giant banks are desperate for infusions of capital from abroad to save them from insolvency. Huge mortgage lenders are teetering on bankruptcy, looking desperately to be taken over by other financial companies.

Foreign banks and municipalities around the world that assumed these risks are marking down big losses.

All this has been caused by a combination of speculative greed, taking on huge risks for higher returns and the refusal to apply financial law and order--i.e. regulation--by the Bush regime. All this was preventable by institutional prudence and a vigilant Federal Reserve.

So what are all these giant financial corporations on their knees begging for these grim days? They are begging the Federal Reserve to use every bit of its authority to save them through lower interest rates and by using a variety of other more abstruse tools the Fed has to rescue the very banks that help fund its budget and dominate the regional Boards of the Federal Reserve.

It is true that corporate heads have rolled--most notably the CEOs of Citigroup and Merrill Lynch. By and large, however, the remaining top culprits who got their banks and mortgage lending firms into such deep losses for investor-share holders are staying put with their enormous compensation packages.

When the big boys get into trouble, they expect Uncle Sam to bail them out. Who pays the ultimate bill? You guessed it. The small taxpayer and the consumer.

So next time your hear the words--deregulation or over-regulation--by the thoughtless think tanks, heavily funded by business money, remind yourself that you believe in tough law and order for big business and your demand that politicians weigh in with a strong enforcement crackdown on corporate crime and fraud.

Greening the Corporation

The "Business of Green" and "Green is Gold" are among the phrases finding their way onto the nation's business pages and into the advertisements of major corporations.

After years of corporate greenwashing, is this wave of corporate greenmania for real? Is it more than hype when the New York Times marks a recent article with the sidebar "The market tells producers: It's go green or goodbye"?

Well, not if the impetus has to come from stronger regulation or environmentally driven government purchases. Those two pressure points have largely been kept dormant or are de minimis.

When business sees environmental management as saving it money, increasing productivity, becoming more competitive and attracting young talent, the prospect of sustainable policies taking root becomes more likely.

Obviously, it was not always viewed this way by corporate bosses who, not long ago, saw our air, water and soil as their toxic sewers.

There is still a long way to go to "green" the entire supply chain from the mines to the markets.

No corporation illustrates this broad continuum better than the Atlanta-based Interface Corporation -- the country's largest commercial carpet tile manufacturer. In 1994, founder Ray Anderson started his company on its goal as a "restorative enterprise," which he described as zero net pollution and 100% recycling by 2020. The company is 45 percent there, he estimates.

Anderson speaks figures in his 100 plus lectures around the nation and world. His company's use of fossil fuel is down 45 percent, net greenhouse gas production is down 60%, while company sales are up 49 percent. Water use is down by a third in its manufacturing and the filling of landfill with waste is down 80%.

"Sustainability," Anderson told the New York Times, "pays in customer loyalty, employee spent-hard cash," plus 336 million dollars in savings since 1995.

Anderson is unique in that what he and his team have done is not anecdotal, but system wide in scope. The news is replete with one large company achieving this with lighting or that with their transportation. With Interface, ecological efficiency is across the board.

Since even a stodgy company like General Electric is moving quickly into selling "green" technology as the next profit center, why are the aggregate figures on hydro-carbon use, greenhouse gases still increasing? Because there are no national missions to take these successful examples--these best practices--and make them a mandatory floor for all companies.

I refer to mandatory performance standards by the federal government--not specific design standards--backed up by specifications set by Uncle Sam, who is the buyer of so many products we all use, for its departments and agencies. These include vehicles, building construction, paper and many other goods and services that could be purchased only from solid "green companies." (See: Forty Ways to Make Government Purchasing Green by Eleanor J. Lewis and Eric Weltman. Available from the Center for the Study of Responsive Law for $10. Mail orders to PO Box 19367 Washington, D.C. 20036.)

Mandatory federal standards and government purchasing specifications brought the people safer cars, higher recycled paper content and greater fuel efficiency for their vehicles and appliances. The deregulation craze of the past twenty-five years ended most of this forward progress.

Moreover, the retarding corporate powers are still going anti-green. They oppose a carbon tax and long overdue upgrades of fuel efficiency and pollution control standards. They want to build dozens of costly, unnecessary, unsafe atomic power plants with no less than 100% federal government loan guarantees.

This overall persistence of corporate intransigence needs to be kept in mind as the blizzard of green announcements by companies continues.

To keep our demands on industry and commerce to become more efficient, productive and environmentally benign, it is worthwhile to quote a passage drawn from Natural Capitalism, a book co-authored by a physicist, a lawyer and a successful businessman:

"Whether through better design or through new technologies, reducing waste represents a vast business opportunity. The U.S. economy is not even 10% as efficient as the laws of physics allow. Just the energy thrown off as waste heat by U.S. power stations equals the total energy use of Japan. Materials efficiency is even worse."

GM Paying Off Talk Radio Hosts

Just when one guesses that the standards and practices of national talk radio could go no lower, General Motors comes along to show the way to new lows.

Automotive News (August 6, 2007), the leading trade journal for the industry, reports that GM is wooing the radio stars. Its article led with the headline: "Puff Piece. Rush Limbaugh is one of the radio personalities GM is working with to talk up its vehicles."

Reporter Mary Connelly writes that "GM says it doesn't pay the stars directly for their endorsements, although it advertises on their shows. It gives them new GM cars and trucks to drive for two weeks each month. The company also invites the celebrities to Detroit for private meetings with top executives and VIP tours of GM facilities. The attention is paying off."

Sam Mancuso, GM's director of brand marketing alliances, told Ms. Connelly that his company made contact with 17 national radio hosts along with numerous local talk show personalities in cities such as Dallas and Los Angeles.

Mr. Mancuso is pleased with the results. The talkers are talking up GM vehicles on their programs--no doubt encouraged by GM's ample advertising budget on those same stations.

He emphasized that GM does not give these radio celebrities any scripts. Which allows for the kind of impromptu creativity that he said reflects a "real emotional connection" with an audience that "knows they are being genuine."

This is just what you need to know about a company's engineered vehicles--words which flow from an emotional connection garnished with free use of vehicles and other freebies!

Take Rush Limbaugh's effusions to his dittoheads: "GM has a ton of momentum," he exhaled, "GM cars and trucks have never been better." This assertion doesn't tell his followers much, however, inasmuch as GM's cars have never been hard acts to follow.

But the Rush doesn't stop there. He waxes further: "They [GM] are working hard and they are thinking smart. Believe in General Motors, folks."

Before you can aspire to do that, you have to believe in Limbaugh and all the other talkers - takers of GM's largess. Atom Smasher, a modestly named Dallas disc jockey, was positively oozing on the air: "I am driving around in this Cadillac, and I am not going to want to give it back - the Cadillac SRX…. To all the guys at GM: Good job."

His crosstown colleague, Chris Ryan, might as well have been crossing over to his advertising buddies and doing the ad. But this was not ad time. This was program time when he declared: "Have you seen all the cool things that's going on at GM? I have. If you're thinking about a new car, you got to look at GM."

The auto industry has long been brazen when it comes to using its advertising clout. Way back when he was in Dayton, Ohio, Phil Donahue was cut off from car dealer ads after having a program on car dealer deception.

The Washington Post found local auto dealers going over to its smaller competitor, The Washington Star years ago, after a Post columnist tore into car dealer fraud. The dealers made it possible for the Star to start an auto puff section with their ads.

More than a few talk show hosts already read their station's ads. That's not enough. GM, viewing the inundation of product placements in movies, is pushing the envelope of advertising integration through talk radio program content.

What is surprising is that GM purportedly enlisted not only the expected suspects like Sean Hannity, Laura Ingraham and Bill O'Reilly but also Bill Press and Ed Schultz, know for their liberal views. Attempts to reach Press, Schultz and Hannity were unsuccessful. Surely, they will be explaining their relationship shortly.

In the radio music disc jockey world, taking such freebies would be considered payola to push songs. Under Federal Communications Commission (FCC) rules, such gifts would be illegal.

So, what about the talk radio arena? Good question. If the freebies are fully and regularly disclosed, then maybe there is a distinction between what is unlawful and what is unethical.

In any event, the FCC needs to investigate. Secretary of Commerce, Herbert Hoover, later to become President in the nineteen twenties, called radio "a public trust." He believed the public airwaves, being owned by the people, should convey no advertisements whatsoever.

What a gap between the arch-conservative, Herbert Hoover, and today's so-called conservative talk show gabbers!


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