(bumped up Tuesday morning with significant breaking news on the new Stanford scandal, and the D.C. insiders involved)
Update: After Bernie Madoff, it appears that the next largest fraudulent investment scheme is centered on an entity known as Stanford Financial. This company has offices in Houston, TX and operated an offshore bank in the Caribbean. While this story is developing it is not surprising that the main principal, Allen Stanford, knew how to play the “Legalized Bribery” game we highlighted yesterday. Who benefitted from his millions in gifts and lobbying? Charlie Rangel (D-NY), Greg Meeks (D-NY), Bill Nelson (D-FL), Pete Sessions (R-TX), former CA governor Gray Davis, and the Democratic Party.
Quality business relationships are always mutually beneficial. If they are not mutually beneficial, then they will not thrive or perhaps even last at all. A strong business relationship, like any personal relationship, needs a foundation of honesty and integrity. As in any relationship, there will be plenty of instances in which the parties have disagreements and misunderstandings. If the relationship is strong enough, it can not only endure through these times but often grow stronger as a result of them. The challenge in any relationship is when one party is conflicted and attempts to serve two masters. These conflicted relationships – whether personal, political, social, or business – must change in order to grow or are doomed to languish and underperform if not die completely.
On Wall Street, a business that so grossly prioritizes short term profits versus long term customer relationships will not grow. Perhaps for a period of time the excess profits will be addicting and mesmerize management, but over time that model will not work. Bear Stearns is a classic example of this principle. From having worked there for 7 years in the 90s, I evidenced it firsthand.
Measuring and assessing the nature of relationships in Washington is extremely challenging. While our elected officials on both sides of the aisle tell us one thing, the backroom dealings, heavy lobbying, and quid pro quo generate tremendous frustration on behalf of the electorate. Are our elected officials oblivious to the details of critical issues and thus ineffective in serving the public interest? I do think this lack of understanding is a serious problem but it is not the biggest problem. The fact is that the business of Washington is a BIG business and the elected officials are the beneficiaries of the largesse bestowed upon them from heavy money lobbying.
Why is it that legislation to support the banking industry does not have clearly stated restrictive covenants? Why is it that a large “stimulus” bill is so loaded with earmarks and lacks real meaningful IMMEDIATE stimulus? Very simply, our politicians on both sides of the aisle are beholden to those moneyed interests who put them in Washington in the first place. Is it truly any wonder why Congress has near single digit approval ratings? It shouldn’t because they are not working for the electorate, they are working for the lobbyists. While President Obama talks about “change” across the board and specifically in regards to lobbying, his campaign and initial maneuvers raise serious doubts about his integrity on this front.
These issues are highlighted in a Boston Globe review of the book, So Damn Much Money written by Robert G. Kaiser. The Globe offers:
Today, members of the House and Senate routinely spend “a fourth or a third of their working hours soliciting those campaign contributions” that once would have “looked a great deal like bribes.”
Kaiser corroborates his findings with the observations of a host of seasoned and savvy Washington insiders. A few will suffice to make the point:
– Former Nebraska Republican senator Chuck Hagel told Kaiser, “There’s no shame anymore. . . . We’ve blown past the ethical standards; we now play on the edge of the legal standards.” Hagel comes to believe that “money and its pursuit [have] paralyzed Washington . . . Nothing truly important for the country [is] getting done.”
– Leon Panetta, a former member of Congress, Chief of Staff in the Clinton White House, and Obama’s newly confirmed CIA director, says that “legalized bribery has become part of the culture.” Members of Congress “rarely legislate; they basically follow the money . . . They’re spending more and more time dialing for dollars.” Panetta laments the quality of people now running for Congress, echoing the conclusion reached by Hagel and other old hands: “It’s all about winning, it’s not about governing anymore.”
Stimulus? Financial Stability Plan? Bipartisan interaction? Campaign finance reform? No, Congress is too busy collecting money to worry about these issues. In point of fact, after having sent my opinion about the stimulus proposal to my new Congressman Jim Himes (D-CT), his office did respond electronically thanking me for my message and simultaneously asked me for a campaign donation for his re-election in 2010. Something is seriously wrong here!!
P.S. For those who care to read more about the incestuous nature of these Washington relationships, a reader was gracious enough to share this link of an interview Bill Moyers had with Simon Johnson, former chief economist for the International Monetary Fund.