The Big Story – today it’s the terrible loss of life and widespread injuries in Haiti following the earthquake.  For much of 2010, as in other years, there will be a number of Big Stories that briefly dominate the news and pass by as the 24/7 news cycle moves on to other stories.  But one Big Story that at times dominate the news and [that] will be covered almost continuously will be about Wall Street and the rage that the American People feel towards the investment bankers, commercial bankers, brokers – everyone who did “this” to them (our neighbors), to us, to the nation.


Think of RAGE this way:  At its root it is about the apparent lack of Responsibility and Accountability [effective Governance] and Ethical behavior on the part of Wall Street leadership brought the economy to the brink of financial disaster.  We may have moved back from the edge of that steep cliff – some of us, anyway – but there are still 7 million plus Americans who have lost jobs; millions more are underemployed or have quit looking for a job; 3 million home mortgages have been foreclosed; small business is being starved for capital; and now, commercial real estate is following the disaster that occurred in the resident real estate market…need we go on?


And who is to blame?  In the minds of many Americans, Wall Street leadership.  Government regulators who took their eye off the ball are a close second. If you define the public as voters, constituents, investors, employees, borrowers, homeowners, public officials, entrepreneurs – then all have been impacted by the risky and at times reckless behavior of the leaders of the nation’s largest financial services organizations.  The rising public outrage is finally being heard loud and clear in the halls of congress and in the White House. (We have been hearing in conversations with family members and friends and business associates – where is the public outrage? It’s here.)


Here are some of the reasons why Wall Street will continue to be the Big Story long into 2010:


  • The Financial Crisis Inquiry Commission hearings are getting underway.  The first chieftains of finance were in Washington today being questioned by members of Congress.  There will be much, much more drama to come in these proceedings, which will continue out to year-end when a report is due. C-Span and the financial and news channels will have much content to share through the months of 2010.
  • Once the commission’s report is out at year-end, as in the case of the September 11 Commission, we will be hearing about the findings for a long time to come.  Short term, the answers to questions raised – and the long introductions to the questions by lawmakers (speeches, really) will be the stuff of The Big Story all through 2010.
  • The public rage will fuel the debate about the appropriate measures needed to effectively regulate Wall Street firms, commercial banks, and other market players (like hedge funds and derivative instruments).  There is comprehensive draft legislation moving through the Congress and fierce lobbying by financial firms is underway as well.
  • President Obama and members of Congress are proposing special taxes on the big banks that received government funds as the crisis deepened (a number of firms have paid the funds back) – the $120 billion number of the starting point (the amount the US government is said to have lost in the rescue effort to date).
  • The Big Story within this Big Story:  2010 Wall Street bonuses.  Buckle your seatbelts – with big banks (those “too big to fail”, and receiving federal funds with almost no strings attached) are about to announce the bonuses paid to their leaders, and to the rank & file.  The numbers will be in the tens of billions – because the banks are reporting profits once again. (Thanks to government aid, critics say – but that will be another part of The Big Story.)  The President and Congress have talked up a possible 50% tax on the bonuses paid by banks that received federal funds.  Wall Street firms will not understand the rage at the grassroots level as struggling families hear about multi-million dollar payouts at banks that were on the brink of failure (or so it was presented as rationale by the Bush Administration for the rushed bailout) now flush with cash for bonuses.
  • There will be many lawsuits filed (in addition to those working through the system right now) against Wall Street organizations – public employees’ pension funds are among the prominent plaintiffs, aided by the state attorneys general.  The crisis commission revelations are sure to fuel a number of these legal actions.

That’s a beginning list of why The Big Story of 2010 promises to be a long string of stories about what happened and why in 2007-2009.  And who did what to whom.


Remember the public rage – RAGE – this is about the failure of Responsibility (to stockholders and stakeholders, as fiduciaries), Accountability (to employees, stockholders, customers, various stakeholders, and to the nation), lack of effective Governance (and oversight) by boards and executives, and un-Ethical behavior by a number of capital market players.  (Some large investment bankers now stand accused of marketing Collateralized Debt Obligations to investor-customers while themselves shorting the same instruments – one more element of The Big Story coming to light as emails are surfacing).


We’ll stop here with the thought expressed by Sir Winston Churchill as events during WW II seemed to be turning in favor of the western allies in November 1942  “Now this is not the end.  It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” When we look back, we may see the Big Story of 2010 as the beginning of real changes in the capital markets and in financial services regulation.


Again paraphrasing the Great Orator, WC:  “Never have so few done so much damage to so many in such a short period of time.”  Stay Tuned to The Big Story in 2010 – underlying all, the public outrage at what and how much has been done to the many by the few.



Say it ain’t so, Joe.”

Back in the 1919 baseball World Series players on the losing Chicago White Sox team were accused of throwing the game and “fixing” the outcome so that the Cincinnati Reds would win.  Among the players accused was “Shoeless” Joe Jackson, who was later said to have admitted taking part in the conspiracy.  (He was suspended from Major League Baseball the following season and the incident mars an otherwise admirable lifetime record in baseball.)


This may be myth or factual, but media reports at the time said that Jackson testified before a grand jury in 1920 and admitted taking part but in a trial was acquitted with the other accused players. Leaving the court house, a large group of youngsters awaited…one approached Joe Jackson – obviously a fan – and supposedly asked if the accusations were true.  (News reports said he asked, “It ain’t true, is it, Joe?”  And Jackson answered in the affirmative and then walked by.)


Over time this became a favorite of sports writers who would pose the question – “Say it ain’t so, Joe” – whenever a star player was accused in this scandal or that.


Now we know it is true – for one baseball star who, over the years was the idol of many youngsters.  After years of denying the rumors of charges that he took steroids, Mark McGwire finally stepped forward to admit that he took steroids in the years that he was a major leaguer.  “I wanted to tell the truth,” he said.  “I decided to take the hit.  I’ve been taking hits for five years and it doesn’t feel good…”


Appearing before Congress, Mark McGwire denied taking steroids.  He said the same thing on CBS “60 Minutes.” He has said he didn’t take the drugs in answer to media inquiries.  Now that he is returning to baseball, it was time to come clean.


There will always be **** (asterisks) in people’s minds and recollections if not in official records about the fantastic records that player McGwire set, including the shattering of New YorkYankee star Roger Maris’s record for home runs in a single season.  We learned that McGwire has apologized to Roger’s widow as part of his taking responsibility for his actions.


Among the personal costs to Mark McGwire:  He will most likely never receive the votes to enter the Baseball Hall of Fame.   There are other costs, for sure, including the self-inflicted wounds on his own fame and reputation.


Who knows what other damage has been inflicted on countless young athletes…those who hungered after the same kind of fame and recognition that Mark McGwire achieved…and who may have followed his example to take steroids to boost performance?  If the current chapter in the Mark McGwire story conveys the importance of personal accountability to aspiring young players in all sports, centered on the painful confession and owning up to responsibility that will be a huge contribution to amateur and professional sports.  It’s painful for all to watch, but better late than never (the confession and acceptance of responsibility).


In the same newspaper I read all about the tearful confession, there was a disturbing story of a young (high school) wrestler hospitalized after a near-fatal overdose of an unknown drug.  We don’t know yet what caused his collapse…and it’s not fair to speculate.  But when we hear of an athlete falling ill…don’t we wonder…and remember the Mark McGwire story?


Drug use among our young people is now an epidemic.  In addition to the coaching and training in the art of our competitive sports, it is absolutely imperative that the adults in charge stress personal accountability and that young athletes have to avoid the use of drugs to enhance performance.  (As well as drugs for recreation and escape from the pressures of everyday life.)


For the next chapter in the Mark McGwire story:  How about the role of special youth advisor…criss-crossing the country with his new team, visiting high schools, even junior highs, to spread the message:  Don’t do drugs – look at what happened to me.  It can happen to you.  The medals and awards and glory are not worth it in the end.


Redemption, forgiveness, overcoming adversity.  It used to be the American Way. It can be again … if we all try.  Your thoughts?


President Barack Obama (#44) followed the advice of predecessor Harry S Truman (#33) this week; he took responsibility for the screw-ups related to the Flight 253 attack.  As President Truman proclaimed – always evident by the plaque on his desk:  “The Buck Stops Here.”  Plain speaking Harry, from the Show-Me State (Missouri), over the course of his presidency (just about 8 years) made many difficult decisions and stood tall in the face of frequent criticism.


President Obama ordered a thorough probe of the mishaps, mistakes, oversights, and system failures that allowed a Nigerian national to climb aboard the Northwest/Delta flight (Amsterdam-Detroit) that he would try to bring down over the territory of the United States of America.  Clearly, an act of war in the War on Terror in which this nation has been engaged for several decades (September 11th; embassy attacks in Africa; embassy bombed in Lebanon; US Marines attacked in Lebanon; USS Cole attacked in Yemen…and on and on…).


And President Obama began to acknowledge that we are at war with combatants who are not representing specific nation-states but organized and just as deadly as when armies march under national banners.  “We are at war,” reported The Wall Street Journal quoting President Obama, “at war with Al-Qaeda.”  We applaud him on standing tall and being a symbol of accountability – so sorely needed in America in these times when other leaders use weasel-words to squirm out of responsibility.


Becoming president on the death of the war time president, Franklin Roosevelt, President Truman would write that he remembered…”Now the lightning had struck, and events beyond anyone’s control had taken command.  America had lost a great leader, and I was faced with a terrible responsibility…”


President Truman swung into action, guiding the grieving nation to end WW II; approved the use of two nuclear bombs to end the war in the Pacific; faced down Soviet Russia on many fronts in the early days of the Cold War (including the Berlin Airlift, an act that challenged the Russians directly in Germany); reacted immediately to the North Korean invasion of South Korea with a US – UN military response; fired an insubordinate hero, General Douglas MacArthur; with General George Marshall launched the Marshall Plan to rebuild war-torn Europe…and more.  The buck did indeed stop right there at his desk.

And so to this war, this wartime president.  When the facts are known, and remedies clear, President Obama should make the necessary adjustments and bring homeland security – defense – to the level needed to protect our nation.  Some hard choices will have to be made.  Fiefdoms overcome; barriers to cooperation broken down; heads knocked together.  That’s what you try to do in wartime.


You also ask everyone to make sacrifices on behalf of the nation, for the general welfare.  President Roosevelt demanded that in WW II.  When wartime corporate profiteers were exposed – by Senator Harry Truman and his committee before he became VP – President Roosevelt and the Congress moved to adopt excess profit measures (for a time, income taxes were at 90% for the high earners) and clawed back ill-gained profits once the war was underway (1942).


When the armed forces needed materiel, rationing was introduced at home.  Homemakers turned in their pots & pans to be recycled for the Arsenal of Democracy.  President Roosevelt frequently took his message to the American People on “Fireside” radio chats. He told the nation as the build up for war was underway (May 1941) that … “Your government has the right to expect that all citizens take part in the common work of our common defense…”


Adding, “This is no time for capital to make, or be allowed to retain, excess profits…”

Maybe those kinds of measures, realistically adjusted to 21st Century society, should be considered by the Administration.


We could start by taxing the overly-generous (and certainly the most obscene) bonuses of the financial sector organizations that received “war time” financial rescue by the federal government.  About those risk-prone financial organizations deemed too big to fail – what sacrifices are they committed to make in this wartime environment?


As the WW II wartime president said in 1941 (repeating the words of the signers of the Declaration of Independence):  “With a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes, and our sacred honor…”


We are all in this together, right?  What do you think?

Accountability Does Matter in Getting to the Bottom of the Screwups in the Attempted Attack on the US at Christmas Time — Who Did What / Or Didn’t Do What / And What Lessons We Can Learn From That

We’re back blogging today – a Happy New Year 2010 to all.  We resume this running commentary on matters of accountability (hence, the title of the column) after a break in 2009 when we tended to other business.  This diversion included writing/editing the Perspectives & Insights newsletter which you can read on our INSIGHTS-edge platform.  My colleagues urge me to be brief – it’s the Web, not a book chapter – and so I will try my best to be on point and to the point…and more Blogger-like than long form essayist.  I may wander from this promise with longer pieces when the muse within stirs.


* * * * * * * *


In Michael Moore’s film on the September 11, 2001 attacks on the United States – “Fahrenheit 9/11” — then-President George W. Bush is shown sitting in a Florida classroom which he was visiting at the time…staring down as if confused or bewildered on hearing the news of the first planes crashing into the World Trade Center…sitting for a l-o-n-g period (seven minutes, Mr. Moore tells us in the movie).  Then the president left the school (to wander the skies, it is portrayed) and very slowly the resources of the federal government began to react to the terrible damage being inflicted on this nation by a gang of terrorists.


Over the next decade literally hundreds of billions of dollars would be invested in homeland security, in the intelligence services, the armed conflict in the Middle East – and let’s be clear, the War on Terrorism was clearly described as such by President Bush – and yet very simple things seem to be still going wrong.


December 2009:  A Nigerian national disappears from his family and shows up in Yemen where he is trained in terror tactics.  Strange emails from him compel his father (a brave man) to go to the US Embassy to report his son’s changed behavior and potentially-threatening behavior.  The son travels with a US visa (issued by the State Department) with inadequate documentation, buys a one way ticket with cash and checks no luggage.  He slips through the security system and after a long journey on approach to the Detroit, Michigan airport he attempts to damage the plane and bring it down.  Alert passengers spring into action and the threat is addressed.


The current President of the United States was even slower that his predecessor in [publicly] responding to the event.  Finally, from his Hawaii vacation, President Barack Obama commented publicly…sounding more like a constitutional law professor (which he once was) than the Commander in Chief (which he most certainly now is) as an armed attack was attempted on US soil, or in US airspace to be more exact.  Where was the indignation and call to action? Only later did he begin to sound more like a war-time president – which this writer believes he is – to demand accountability of the leaders of agencies under his supervision.


(See The Washington Post story on this – “Obama Addresses Airline Security in Low Key Fashion” – days after the attack —


Michael Moore owes President Bush an apology, it seems to me, for the movie director’s depiction of the president as diffident, or dis-engaged.  Or maybe he’s got another movie planned in which the current president will be accurately depicted in his slow-to-respond mode.  Fair is fair, right?


A few days ago Federal Reserve Chairman Ben Bernancke made an important speech and admitted that the Fed could have done more to attempt to prevent the capital market crisis which destroyed many personal investment portfolios.  Hindsight is 20/20, someone once observed.


As the chairman was urging the Congress to grant the central bank more authority to deal with future crises, the question is asked, “If the Fed missed this bubble, how will it see the next one?”  We can ask the same question of those in charge of homeland security, right up to the front door of 1600 Pennsylvania Avenue.  (We are promised answers to these and many other questions by the Commander in Chief…soon.)


In referring to the failure of Fed Chairman Ben Bernanke and his colleagues in not taking action before the market meltdown, The New York Times economics commentator John Leonhardt wrote:


“He and his colleagues fell victim to the same weakness that bedeviled the engineers of the Challenger space shuttle, the planners of the Vietnam and Iraq wars, and the airline pilots who have made tragic cockpit errors.  They didn’t adequately question their own assumptions.  It’s an entirely human mistake…”


Mr. Leonhardt could have added the current crisis atmosphere that follows the attempt to down the Detroit-bound airliner.  Today, Umar Farouk Abdulmuttalab was indicted for attempted murder (and other charges) for the Christmas Day attack on board Flight 253 (with its 278 souls on board).


Having been involved in literally scores of crisis or critical issues over my career, experience has taught me that both President Bush (#43) and President Obama and Chairman Alan Greenspan and his successor were behaving like so many CEOs and leaders of various types of institutions.  It is very, very hard to think outside the box and imagine the worse-case scenarios that seem to occur in real life all too frequently in our time.  Pick up a copy of the 9/11 Commission report and read the official findings of that terrible day in American history.  Reads like something penned by a novelist with over-active imagination who kept dreaming up one impossible literary device after another for his book…except that it is all true life events being described.  Failing to comprehend the events that were unfolding, many people in responsible positions were paralyzed and failed to act decisively.


What lessons are to be learned from this most recent event…the Christmas Day Flight 253 attack…what went wrong…how…who should be held accountable?  Stay tuned.


Continuing the comparisons of #43 and #44…where President Bush was long ridiculed for his comment in the wake of the feeble response of FEMA to the events in New Orleans…”heck of a job, Brownie…”  We now have, The system worked! This from the Secretary of Homeland Security (who was speaking on behalf of the administration). We could ask: on what planet Janet?


Partisan politics aside – when serious threats to the nation arise — accountability does matter – so we must apply the lessons learned in serious situations like the Christmas Day attempted attack on our nation.