The Financial Candy Store
and Oversight vs. Regulation vs. Legal-Recourse
(We need a 'Bill of Financial Responsibilities'
(2008 Nov blog post)
Introduction to a letter --- to Congress
In response to the U.S. economic 'meltdown' that surfaced in no uncertain terms in mid-September 2008, via a $700 billion goverment 'bailout/rescue', I fired off a set of Letters to the Editor of a local newspaper.
(This was after sending off a set of letters to members of the Senate Banking Committee -- the contents of which are posted in other 'economy' blog posts on this site.)
The newspaper was being deluged with letters, so it was almost impossible to get a letter published. A letter to this newspaper has a very limited potential audience anyway, and a letter published in the newspaper is not readily available for reference --- and has a very short life on their website. So I post my letters in this blog.
SUBJECT: The Candy Store --- and Oversight vs. Regulation vs. Legal-Recourse
30 Sep 2008
Dear Editor, Daily Press:
If you left a group of children alone in a candy store and told them not to touch the candy, you can bet that at least one or two would eventually help themselves. It is natural. Yet, somehow, 'laissez faire' economists, politicians, and media-pundits expect members of the financial services companies, who are surrounded by billions and trillions of dollars, to NOT be tempted to help themselves.
'Laissez faire' [anti-regulation] proponents do not seem to know about basic human nature. They want neither oversight, nor regulations, nor legal-recourse (i.e. punishment).
[Sounds familiar, doesn't it? --- like what Paulson wanted in his terms for conducting the bailout. He wanted the money to be under his control, with no over-rides by Congress. And he insisted that there should be no punitive actions of leaders of the offending financial institutions.]
In watching C-SPAN (the House) and C-SPAN2 (the Senate) over the past week, I noticed that many Republican Senators and Representatives cannot say the word 'regulation' without calling it 'socialism'. They ignore the fact that regulation is a means to curb the temptations that trillions of dollars bring.
That said, I too have concerns about regulation:
a) that it cannot keep up with the greedy machinations of the greed-iopaths in the financial system,
b) that regulations will actually be set up to motivate the wrong behaviors (accidentally or purposefully --- in the latter case, typically by lobbyists, who seem to write most of the laws lately anyway).
Those Republican Congress persons seem to have no concern about (a) above. They seem to want to make sure that there is no bridle put on greed, no matter where the greed takes a financial professional who is addicted to its charms.
Financial oversight and regulation are going to be very difficult to implement successfully, even if they were well-supported by Congress. Hence, in-place-of or in-addition-to OVERSIGHT and REGULATION, I propose defined-but-flexible LEGAL-RECOURSE --- that is, I ask that the Congress devise targeted, flexible legislation to ...
Set up a system involving trial-by-jury-of-citizens --- that is, an after-the-fact 'punitive' system, since we cannot head off anywhere near all the varieties of mayhem before-the-fact.
Via this system, financial 'persons', who have been DEEMED TO HAVE CROSSED THE BOUNDS OF COMMON HUMAN DECENCY (and caused material harm --- think here of the devastation of retirement savings by the decency-bounds crossed by Worldcom and Enron and Madoff) are to be brought to trial.
And those persons ARE TO BE BROUGHT TO TRIAL BEFORE A JURY OF CITIZENS --- and judged-and-sentenced on the basis of common decency principles that are commonly recognized (and could be codified in a 'Bill of Financial Responsibilities' similar to the 'Bill of Rights') and on the basis of principles that are in the spirit and current body of the Constitution.
Typical jury selection rules would apply. Defendants can have their attorneys --- whom they will no doubt pay with their ill-gotten gains. (Hopefully, most of those gains could be frozen, legally, pre-trial.)
Prosecutors and their investigators will be paid for by the tax-payers. And if the dollar size of the offense is huge, the Justice Department is responsible for making sure that every reasonable effort is made to properly execute the gathering of evidence. The Justice Department is to answer to the Congress as well as the chief executive on these matters. Guilty defendants would be required to pay most of the trial expenses, else serve more time.
LET THE PUBLIC STONINGS (and TAR-and-FEATHERINGS) BEGIN. Well, at least BANISHMENTS --- say to an Aleutian island. The convicted --- the fleec-ors --- will have given up their right to live among the citizens they were fleecing --- the fleec-ees.
(The offenders should be glad that they are not in an Islamic society. The cry would be 'LET THE SWORDS DROP' --- and it would happen. Various body parts would be removed, in proportion to the crime.
Come to think of it, maybe this economic meltdown would not have happened in an Islamic society, because of the threat of the awful consequences. You think?)
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Posted in 2008 Nov 03.