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Wednesday, May 26th, 2010The New Girls’ Club
Monday, May 24th, 2010“Women are healers by nature. We are mothers, sisters, daughters, problem solvers, and leaders. The time has come for the feminization of our politics and our economy. Our nation needs to be healed. That’s not a job for the timid or delicate. It’s not for sissies. It is for the strong, powerful, and wise. The way women really are.”
Remember the Old Boys’ Club…? The boring, cranky, devious one that controls the banks, the economy and most of our wealth creation and money supply from behind the scenes? The one where nearly every key position in government is occupied by an Old Boy? Yes, that one.
Well, there are still a few lifetime members of the OBC firmly entrenched in the Federal Reserve (Grandpa Ben), and the Treasury (Timmy G and Larrykins) who continue to give all our money away to their ever-popular clubby friends.
These are the same old boy club members who along with ex-Goldman partner and Treasury Secretary Robert Rubin gave the store away to the big banks in 1999 with the repeal of the Glass-Steagall Act. Ordinary banks like Citigroup could now legally play roulette with government guaranteed deposits. OB Robert Rubin thought it was such a great idea he took a job with Citibank only weeks after leaving the Treasury.
These same old boys, Summers, Greenspan, Geithner with OB Senator Phil Gramm (now a lobbyist for Swiss Bank UBS) the very next year pushed through the ill-fated Commodities Futures Modernization Act – otherwise known as Derivatives-Are-Born-Free Act. This little understood law overturned a century old rule that had prevented unregulated market bets since the Panic of 1907. Now all bets were off…
Meanwhile back at the Securities and Exchange Commission, the agency that was supposed to be supervising the gladiator games, another group of old boys put the final nail in the coffin. In early 2004, Chairman of the SEC William Donaldson (former head of securities giant DLJ) got together with a few good friends, card-carrying OBC members and business colleagues, the heads of the five largest investment banks in the industry including soon-to-be Treasury Secretary Hank Paulson. Together the six overturned a law that stood on the books for three decades limiting the amount of risky assets the nation’s largest securities firms could hold. In a 45 minute meeting, the barrier between 12 to 1 capital to debt ratios and all hell breaking loose was removed.
Unlimited leverage became official: the biggest banks no longer had to follow “the net capital rule” and could use their “own judgment” for how much risk to take with other people’s money. Within four short years, the five firms would triple and quadruple their risk levels to the point where three of the five firms collapsed along with the United States banking system.
Who benefited from merging boring deposit-taking banking and casino trading by dismantling Glass-Steagall? Citibank, JP Morgan Chase, Bank of America, Wells Fargo…
Who benefited from under-the-radar derivative anarchy?
AIG, Goldman Sachs, Morgan Stanley, Deutsche Bank, UBS, big banks, the hedge fund and private equity community…
Who benefited from reversing the capital restrictions on risk for big banks?
Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, Bear Stearns, JPMorgan Chase, Citibank, Bank of America, Wells Fargo…
I think you know how the roller-coaster fun ride ended.
It is clear who did NOT benefit from the free-for-all deregulation of banks and the refusal to create a derivatives exchange…The working public, small business, you and me. In fact it was the elimination of these three important legal statutes that pushed the American financial system to the brink of collapse in less than a decade. Are you getting the picture? In the words of Oliver Hardy, Old Boys’ Club of America: Another fine mess you’ve gotten us into.
And now for something completely different. The All New Girls’ Club.
Move over boys. The girls are back in town.
Democracy and Law
The recent nominee for Supreme Court Elena Kagan summed up the need for law in the preservation of freedom. “Law matters because it keeps us safe, because it protects our most fundamental rights and freedoms, and because it is the foundation of our democracy,” she said. These words could be easily translated to the current debate on financial reform. Freedom only functions when the laws protect everyone. Keeping our nation’s financial system safe from rape, plunder, and pillage is the ultimate goal for financial reform.
Out of Washington this past decade, little of our government’s actions made rational sense. Economic anarchy was called “free-enterprise” and “reform” was equated with more war and less public safety. Same old story as the old boys kept their stranglehold on the gov and our economy.
Back in the old days (late 20th century America) one voice of reason rang out-the former head of the Commodity Futures Trading Commission, Brooksley Born. In 1998, Born singlehandedly stood up to the firmly entrenched old boy network of Greenspan, Summers, Rubin, Geithner and SEC Chairman Arthur Levitt and fought hard to regulate lethal derivatives citing the risk of unmitigated disaster. Unfortunately, the irrational voices of the old boys drowned her out and her warnings of financial crisis came true.
Sitting on the Financial Crisis Inquiry Commission a few weeks ago, Born had her chance to chastise the champion of free-for-all enterprise and economic recklessness, Alan Greenspan. She told the old boy that he “failed to prevent the housing bubble, failed to prevent the predatory lending scandal, failed to prevent the activities that would bring the financial system to the verge of collapse…You failed to prevent many of our banks from consolidating and growing to a size that are now too big or too interconnected to fail.”
Wow! What a woman. It was almost worth the painful two years of financial woe to see Greenspan become visibly angry and categorically deny what is already documented fact. Ding dong “the Oracle” is dead.
In a sea of male bankers, another woman’s wise words stand-out. Sheila Bair, Chairwoman of the FDIC and long an advocate of safe banking and distressed homeowner assistance, has the odd distinction of being one of the few banking industry regulators in favor of a Consumer Financial Protection Agency. Such an agency “would help community banks, not hurt them,” she claimed in direct opposition to her old boy colleagues. In accepting the Profile in Courage Award alongside Brooksley Born, Bair said, “I’m particularly pleased to be joining …other female awardees who stood up when some of their male counterparts failed to act, or worse, actively fought them.”
Next up in the House of Feminine Wisdom is consumer rights champion Elizabeth Warren, Harvard Law Professor and Chairwoman of the Congressional Oversight Panel. As head of the panel, Warren is a fierce critic of how the bailout money was allocated by the Fed without condition. She has become the nation’s most vocal and toughest advocate for a Consumer Financial Protection Agency.
Warren summed up her fight for reform with this, “It’s ultimately about protecting the whole economy. When we destabilize American families; when we sell them terrible products that explode in their faces. That in turn destabilizes the entire economy. These products that were gonna offer these huge, huge profits weren’t just lousy deals for consumers. They were lousy deals for investors. They were lousy deals for pension funds. They were lousy deals for the worldwide economy.”
Wall Street: Fix this Mess You Made
Two weeks ago as I stood outside New York’s City Hall listening to angry protestors chant, “Wall Street fix this mess you made.” I realized that only our lawmakers can fix the mess they made. A financial system without laws protecting the innocent constitutes economic anarchy… And anarchy is a dangerous thing. It has been an expensive and painful lesson for us as a nation and global community. What does the “free market” really mean? What keeps a society truly free from tyranny after all? Laws can create tyranny or protect us from it – the choice is ours.
The only way to safeguard our economic system for consumers, financial professionals, investors, as well as for bankers is to vigorously regulate the markets. Limiting leverage with capital and debt restrictions, reining in risk of deposit-taking banking institutions (separation of Bank and State), removing conflict of interest from official regulating and rating agencies (eliminate regulator – ratings shopping), and creating a consumer financial protection agency in the same way we oversee every other product on the market from food (FDA) to children’s toys. These changes are basic and reasonable responses to maintain economic freedom, not obscure it.
The Old Boys’ Club has launched a battery of lobbyists who are fighting hard against these reforms and the women in power are pushing back.
Ladies Night
At a recent evening celebrating women leaders, California veteran Senator Diane Feinstein claimed that, “If Congress were all women, we would have financial reform by now.” That may or may not be true. Yet there is something to be said for the healing quality of women. The women in government right now seem intent on fixing the problem, not denying it exists or throwing more wood on the fire.
Feinstein pointed out that 18 years ago when she was first elected to the Senate, there were only two females in that body of Congress. Now there are 17 female U.S. Senators. That is an increase of representation from 4% to 34% in a decade and half. Every election we move closer to shattering the glass ceiling held firmly in place by the OBC that has dominated our nation’s financial system for over two centuries.
Feinstein, Olympia Snowe (R-Me), Susan Collins (R-Me), Barbara Boxer (D-Ca), Kirsten Gillibrand (D-NY), Kay Hagen (D-NC), and Nancy Pelosi (D-Ca) are all leaders on comprehensive financial reform. Margot Dorfman, CEO of the U.S. Women’s Chamber of Commerce took the opposite view on financial reform from her male counterparts at the big business lobby thinly disguised as the U.S. Chamber of Commerce. The USCC is campaigning against the creation of a consumer financial protection agency. Dorfman declared her support for the agency and for “America’s small businesses and communities” by urging Congress to “pass comprehensive financial reform.”
Additionally, Mary Shapiro as head of the new and improved SEC, Bair, Born, and Warren -embody a newly established feminine wisdom that is moving the ineffectual and outdated Old Boys’ Club out of the way.
Women are healers by nature. We are mothers, sisters, daughters, problem solvers, and leaders. The time has come for the feminization of our politics and our economy. Our nation needs to be healed. That’s not a job for the timid or delicate. It’s not for sissies. It is for the strong, powerful, and wise. The way women really are.
The logic of the Old Boys’ Club represented by the ancient Greenspan and the not-so-ancient 50 year old males controlling the nation’s largest financial institutions has rapidly dissipated by its own self-defeating actions.
As for me, I think the patriarchs in the tired dreary old boys’ network had their shot and screwed things up just fine – now it is time for the ladies to take their turn and see if they can clean up the mess the boys made. For my money, I put my trust and faith in the New Girls’ Club.
We have come a long way, haven’t we?
Monika Mitchell - Executive Director editor@goodb.net
For the Love of Business
Tuesday, March 16th, 2010
We stand at the threshold of a moral crossroads in American business. Which way will we turn in the new decade is the dilemma before us. Do we retreat to old and tired patterns of indifference? Or do we find the courage to cut a new and hopeful path to the common good?
The heated debates of healthcare, bailouts, banking reform, financial regulation, usury laws, consumer protection, home loan modifications, small business support, social assistance programs-all point to one fundamental issue – the battle for a moral framework. What do we value in America? Easy Money or Hard work? Self-interest or Community? Vengeance or Forgiveness? Indifference or Compassion?
Do we continue to let 45 million Americans suffer without healthcare as long as we have access to it ourselves? Should we protect unsuspecting or reckless consumers or leave them at the mercy of profit hungry scams? Do we let the jobless and homeless fend for themselves because we are comfortable under our own roofs?
In the end, all of these economic debates come down to one thing: love. Love for our neighbor, love for ourselves, love for the planet, love for humanity. Love for those who are starving, hungry, desperate or forgotten. Love for those whose only hope of relief from suffering comes from you and me and our generosity.
Michael Moore’s latest movie was called, Capitalism: A Love Story. At first, the concept seemed hostile and sarcastic, yet the more I pondered its irony, the more I recognized its truth. Capitalism in its current anarchic state is all about love or rather the lack of it. Love in the Ancient Greek agape sense of the word.
A senior manager in finance explained to me that he functions equally on “Christian principles” and devotion to the theories of Ayn Rand. The author of the 1957 novel, Atlas Shrugged, Rand influenced a generation of market making economists including the two decade Federal Reserve Chairman, Alan Greenspan. Rand’s belief of self-interest over self-sacrifice defined the deregulation doctrine of the last thirty years of government. Yet “Christian principles” revolve around the antithesis of self-interest and focus on community and common good. I asked my friend how he reconciled both conflicting interests, he replied, “self-interest is self-love.”
Self-interest is indeed self-love, yet the doctrine leaves out an essential part of the contract, love for one’s neighbor. Our financial system for the last three decades has moved to loss of love for our neighbor and gain of love for ourselves – at their expense. We might say the new American doctrine has become, Let the neighbors be damned.
Survival-of-the-fittest
The 20th century was a painful and extraordinary classroom for the human species. Genocides, wars, and revolutions revealed the inherent conflicts between morality and money.
In America, in the early 1900s, children as young as five toiled in brutally harsh conditions. Laborers worked from sunup until sundown, seven days a week in unofficial indentured servitude. Women and minorities were completely disenfranchised from opportunity and education. Land was stolen from native occupants with government sanctions. Young immigrants were treated like cattle to the slaughter and locked in unsafe sweatshops to extract every bloody cent. The first half of the American century revealed a savage world of human indifference for the sake of profit.
The die had been cast since the young nation’s inception and the cruel legalization of human beings as property. Industrialization took over where slavery left off with the sanctimonious cry of “survival-of-the-fittest” in business as a near religious dogma. British philosopher Herbert Spencer introduced rags-to-riches Andrew Carnegie to Darwin’s theory of natural selection in finance. Alfred P. Sloan, GM’s chairman declared, “The business of business is business.” Fifty years later, economist Milton Friedman wrote, “The social responsibility of business is profits.” With those proclamations, the dehumanizing of business was official.
Yet business and its patriarchal design forgot one crucial fact: Business is a fundamentally human enterprise. People profit by providing services and products that improve and enhance the lives of other people. How did our ancestors manage to dehumanize something so innately human?
Dogma is a funny thing. We can repeat a concept so many times that we begin to believe it as fact. One unfortunate mantra that defined 20th century finance and the first decade of the 21st was: It’s not personal, its business. Yet joblessness and foreclosure rates defy this belief as the human tragedy resulting from these grows greater by the day.
From the 1940s through the 1960s in America, greed as a moral goal would have been solidly rejected. JFK defined the motto of the “greatest generation” with, “Ask not what your country can do for you, but what you can do for your country.” Yet two decades later the new “morality of greed” as the definition for success allowed their children to step over the writhing bodies of victims on their way to the top.
The savage view of money and profits that resulted in the subprime mortgage crisis and the “once-in-a-lifetime economic tsunami” that we continue to experience globally, reveals that the old beliefs of self-interest over neighborly love are primitive and unworthy of us as modern people.
Our relentless economic struggle offers us a genuine spiritual opportunity as a nation to reexamine what we believe is “right and wrong.” The outcome of the healthcare and financial reform debates will define our moral framework going forward.
Those who benefit from the current status quo and value self-interest over self-sacrifice will continue to oppose universal healthcare, consumer protection, financial and banking reform. The self-righteous haves will continue to disenfranchise the self-defeated have-nots in the battle for equality. The irony of Medicare patients fighting against publicly supported healthcare is not lost on anyone except themselves.
The financial industry, that benefited from direct bailouts of trillions of dollars, will continue to use the profits from their inequitable advantage to squash the dreams of impoverished and unemployed Americans.
Where is love in all of this? Sadly absent. Many ordinary people have been conditioned to think of love and business as separate. Yet they view self-love and business as inseparable. The current definition of selfishness as “virtuous” shows that the soul of money has been left out. Money has no soul or morality, but what we impose on it. If I am okay and you are not, will I help you or look the other way? If I make my living by taking yours, can I really feel I “earned” my lot?
The Ancient Greek philosopher Aristotle defined “moral virtue” as habit. How have we as “morally self-righteous” people developed a habit of indifference to the suffering of others and mistaken it for virtue? If love is the concern for fellow humanity, then can it be made a habit of business? Where would we be today if “love for one’s neighbor” had been part of the core business model in the mortgage market?
In America, we are caught in a vicious circle. Our individualism inspires us to innovate and create. Yet our self-focus obscures our common humanity. If we are part of the fortunate who survived the Great Recession, then full steam ahead. However, those who are left struggling to survive are rendered weak for the fight. It is left to the rest, those who have comfort and conscience to establish a new moral foundation that values prosperity for all, not just a chosen few.
Aristotle believed that the unlimited pursuit of wealth was both unnatural and a hindrance to real happiness. He believed that “money makers” focused on immediate pleasure and not on more weighty needs of the soul. The pursuit of wealth at the expense of the community would divide citizens and undermine the stability of society. The current state of the economy has proven the twenty-four hundred year old wisdom is still timely. (Politics. 1257)
Our “vicious circle” financial system, controlled by a small privileged percentage of the population, has completely abandoned large portions of society. They pull the strings of the economy like we are puppets without hearts or brains. This crisis has forced Middle Class America to its knees-all the more pie to divide up for the lucky few who dictate our lives behind the scenes.
A growing portion of American business, inspired by some of our European counterparts, is repeating the new mantra for the 21st century: doing well by doing good. More and more an expanding consciousness among enlightened people comprehends the primitive nature of self-interest at the expense of our neighbors. It gets louder and louder and fills the moral vacuum with a revolution in social responsibility for a new generation of business minds.
We believe in make money by making the world a better place. Perhaps if we repeat that enough, it will replace the economic brutality of the past.