Posts Tagged ‘Financial Reform’

THE FOX AND THE HENHOUSE

Sunday, July 25th, 2010

Once upon a time…well…never mind.  We all know the old adage about hiring the fox to guard the henhouse.  The old saying must have been created especially for this occasion though, because  we’ve never had a bigger fox guarding more hens than we’re about to have now.

Last week, the President signed to law the new Financial Reform bill that will, in theory, provide more strict government oversight of the financial zealots on Wall Street.  Let me be the first to admit that something needs to be done, for sure.  In the wake of the financial meltdown of Lehman Brothers, AIG, the auto industry, and Freddie Mac and Fanny Mae, one not need be a rocket scientist to see that something is wrong.  Let me also admit here that I believe in free markets, trade and capitalism.  I don’t believe, however, that there are many people who need or could possibly earn some of the outrageous bonuses and compensation packages that have become the norm over the last several decades.

By and large, these are not people who have demonstrated some remarkable business savvy in the private sector.  It’s Hedge Funds and Annuities, trading on futures and speculation, and in essence nothing more than a gargantuan and complex shell game.  When thousands of Americans who had invested conservatively, saved money, planned a retirement…and then lost every dime to the likes of Bernie Madoff…something is dreadfully wrong.   It’s not unlike the health care system, also broken and complex beyond need.  It needs to be fixed.  What is remarkable is not so much that something is broken…but who we repeatedly send in to fix it.

The notion of the federal government nominating itself to be the regulator of the private sector financial world is exactly like the fox voting himself head of security in the chicken division.  The chickens would protest and be astonished.  But most Americans don’t even blink at the absurdity of what has just happened.

Yes…the same strict government that already had a Securities and Exchange Commission in place during the financial meltdown.  The same SEC that ignored repeated warnings from outside sources that Madoff was operating a huge Ponzi scheme.  Even with smart, legitimate people coming right to their desk with proof, they still did nothing to investigate or stop Madoff.  We heard Barney Frank tell us how Freddie Mac and Fanny Mae were solid, literally weeks before both institutions imploded taking an entire housing and mortgage industry with them.

Now, these same people have written another 2,000 pages of law, that will be enforced, I’m sure, with the same strident vigor as the last 2,000 pages were.  In other words, not at all.

Who is more corrupt with the public checkbook than our own politicians?  The same folks who spent 3 million bucks to study shrimp reproduction.  Just another day in the pork barrel.  And you know how this stuff works.  Some Senator somewhere has a nephew that “had a landscaping business, then he got into the blow and the next thing you know he’s bankrupt.  So…I bought him a boat, a snorkel and a clipboard and told him to go watch shrimps-gone-wild for a couple of years and take some notes…”.  Don’t laugh, this is exactly how pork works, or doesn’t work, more accurately.

This is the same government that, as part of the stimulus bill, spent 15 million dollars to build an underground tunnel for turtles to pass under a highway in Florida.  For 15 million bucks I’ll spend the next twenty years down there carrying the turtles across the highway on a velvet pillow.  How come I don’t have an uncle in Washington?

Never mind the fox, none of the above even addresses what the real intent of this law is.  I’m surprised there weren’t more “slippery slope” calls during all of this, because this is a Black Diamond Trail for sure.  It will be a much shorter leap now to the European model of income redistribution, a government cap on personal income, and a general one-size-fits-all approach to our economy.  One size, that is, for the working class.  The folks in Washington won’t be buying off the rack anytime soon.

Every American should wince at the prospect of the government controlling Wall Street.  Companies that allow huge bonuses to CEO’s who are mediocre at the expense of their stockholders and customers should be punished, but not by the government.  They should see their business dwindle and die as the customers stop buying their product, and turn to a competitor who operates a tighter ship.  But the notion of our government, that hasn’t seen a balanced checkbook in decades, is going to fix this problem is….well…like hiring the fox to guard the henhouse.