I just watched Inside Job, a movie that came out this year and is about the 2008 world financial crisis (when you watch it you will be shocked and surprised as well as get angry at the current establishment). People are talking about debt and deficit now, but its really a scam to cut the social programs. Anyway, part of the movie talks about financial reform and it notes how no real financial reform has passed in the Obama Administration. Executive compensation is the real sticking point for me, as is no regulation of derivatives.
In 2009, the House of Representatives Committee on Financial Services passed the Corporate and Financial Institution Compensation Fairness Act which the post by the Jurist’s blog states would “restrict the way in which executives for publicly-traded companies can be compensated.” At that same time, President Obama said there would be a $500,000 cap on money of executive’s bonuses if the U.S. government had stock in that company. That was 2009. The AFL-CIO writes that “In 2010, Standard & Poor’s 500 Index company CEOs received, on average, $11.4 million in total compensation— a 23 percent increase in one year. Based on 299 companies’ most recent pay data for 2010, their combined total CEO pay of $3.4 billion could support 102,325 median workers’ jobs.” Also the article notes the executive compensation of many top executives as well. The point I am trying to make is that no effective financial reform has been attempted by the U.S. government, by the business-laden Bush Administration and the easily manipulated Obama Administration. I believe that simple reforms would change that.
For instance I believe that although the so-called reform legislation doesn’t change the culture of the financial industry. Those in the financial industry don’t care about the American people. To restore an America without a financial culture that has gone amuck, the Gramm-Leach-Bliley Act that is known to some as the Citigroup Relief Act should be overturned and the Glass-Steagall must be reinstated so that future mergers can be stopped. Along with this, the antitrust division of the Justice Department should be regulated as to prevent any pro-industry people from taking jobs in that division of the government. This would insure that the government becomes the big “trustbuster” again. Along with that last statement, I believe that people that are appointed to government office such as the Attorney General Eric Holder, who worked for the industries he is not regulating now, should not be allowed to be in that position. People that work for the public interest should be the only ones allowed in public office, since the government has a duty to the people. This would still be part of the civil service system, but it would an additional reform and would insure “a government by the people and for the people shall not perish from this earth” as President Abraham Lincoln said in his Gettysburg Address.
Back to mergers and the financial markets, Inside Job’s screenplay states: “In December of 2000, Congress passed the Commodity Futures
Modernization Act. Written with the help of financial-industry lobbyists, it banned the regulation of derivatives.” With that in mind, the Commodity Futures Modernization Act should be repealed as well and replaced with legislation that regulates derivatives since those money making devices not only were a cause of the current economic crisis (which some like myself call a depression) but will cause a future economic crisis. In the 1990s, it was attempted to regulate them, but it was shutdown by those in the government such as Larry Summers and Alan Greenspan that said it would ridiculous and unnecessary to regulate derivatives.
Finally to the problem of executive compensation. I am not in support of government bailouts of any public company, especially big business. If they fail, that’s their problem. Some business such as small businesses and other businesses that are not abusive, it could be appropriate to give a temporary loan if that is necessary, but that loan would not be a bailout. Anyway, I believe that the Board of Directors in a company should be chosen by the employees, not the executive. This should be a law forced on the companies or any other measure that would allow the companies to accept this measure. I am of the belief that many of these companies should be owned by the workers, so the top management would not be needed. Executive compensation should only be given out in terms of a company helping the public or other reasons as determined as needed (not for selfish reasons), but not during the middle of crisis. That is unacceptable. If the Board of Directors does not fire the CEO for certain abuses (like taking crazy bonuses when people are suffering) that are evident, the Treasury Department should reserve the right to remove the CEO. The CEO could then stand trial in a special court to find more abuses in the corporations where as many people from the company as possible would testify. Each judge would be put in a extensive screening test and be picked by an impartial commission. But under no circumstances could the CEO that was removed from the corporation be reinstated. I would hope that this reform would help improve the pay culture in the American financial industry.
I know that I may have not mentioned every financial reform that should be accomplished, but these three reforms are some that have not only been ignored but they prove to some the problems of capitalism that has ruined since the deregulation since the atrocious Reagan Administration (which also led to the criminalization in the “War on Drugs”, ruining the lives for many Americans, especially the blacks and the poor of the other America). As the end of Inside Job states: “They will tell us that we need them, and that what they do is too complicated for us to understand. They will tell us it won’t happen again. They will spend billions fighting reform. It won’t be easy. But some things are worth fighting for.”
