What the hell is going on when the beneficiaries of the TARP Program pledge not to loan any of the proceeds. That's right. They are pledging to their shareholders in the splendor of a luxury resort that they will not even consider using the money for the purpose it was originally intended. This is the tip of the iceburg. It is time we begin to yell out loud. The US has the worst executives in the world.
The NYT had a front page article on the bailout in the Sunday edition. See Times Article
The essence of the article was about the proud proclamation on the part of CEOs running these banks that they would be looking to use the proceeds of the bailout as a rainy day fund or for future acquisitions, but that actually lending this money was way down on the priority list if on the list at all.
After leaving the business world in disgust a few years back, and spending many hours wondering how and why business leaders (my peers) had become so amoral if not outright corrupt, I thought I would not be surprised anymore at the amazing lack of any sense of responsibility shown by these greedheads. But I was completely taken aback upon reading this article at how truly warped these people are. One of the sponsors of the junket for bankers in Palm Beach said that the priorities being expressed by these executives, "might not conform to popular expectations that the money would be immediately lent to consumers.". How is that for the understatement of the century? Is there anyone out there who thought that this money was for anything but immediately lending to people who needed and qualified for credit? Remember the "credit freeze"? So what the hell happened?
The answer, of course, is nothing happened. And that is a big part of the problem. After the Enron disaster, I remember the outgoing CEO of Medtronic being asked what went wrong and he gave a simple answer. He basically said, "The wrong people are running companies." I believe he was onto something, but it was not as simple as that. The big question is why are the wrong people running companies?
It all started with Reagan and Milton Friedman who basically spread the new gospel of deregulation and tax decreases for the highly paid along with a war on unions and working people at large. This changed the game in terms of the operating culture of the corporate executive suite. In a recent diary by tasini he points out that worker productivity has been steadily increasing without pause even after Reagan. What changed was that after 1980 this no longer translated into wage gains. As there was an evaporation of rules and taxes the balanced executive was slowly replaced by those who valued short term personal wealth above all including workers. It took about a generation for this new culture to permeate the executive suite, and since boards are typically comprised of other executives it spread completely. Soon, bonus plans, exit plans, and golden parachutes were the only things being seriously being considered instead creating lasting great companies. Obviously, there were exceptions but they were becoming a small minority. In my career as an executive, I saw the transformation of the board room ethos from trying to balance the needs of all the stakeholders to one of situational ethics, short-term thinking, and self dealing. This happened over the last 30 or so years, but really kicked into high gear when the Bush II administration came into office with its utter disregard of any sense of civic responsibility and its embrace of lying, cheating and stealing at the highest levels.
In case you are not convinced yet, let me entertain you with some facts. William Mcquire, former CEO of United Healthcare, was forced out in 2006 for backdating stock options which enabled him to take compensation of $1.6 billion out of the company over a ten year period before he was canned. For you math retards, that's $160 mil per year to keep his company benefiting and to "make health care more affordable". He couldn't live on a regular $10 mil or so a year, so he felt compelled to cheat his employees, caregivers, customers, and shareholders to get these astronomical payouts. United Healthcare is recognized as a cheapskate among medical practitioners and many groups are not accepting patients with United coverage anymore. Do I need to point out that none of McGuire's ill gotten gains were paid back nor was he ever held accountable for his cheating? This is not an exception. Most of the insurance companies are paying their CEOs big bucks for keeping costs down by denying claims, or as it used to be called--committing insurance fraud.
I did a financial study of Pfizer Corporation a while back to see if there was any truth to the myth big Pharma spreads. Namely, that without making 3X the profits of other manufacturing firms, they would not be able to carry on the research necessary to give us our sorely needed wonder drugs. I found that they spend about 6% of revenues on research and around 20% on selling and marketing expense. It is easily within their capability to cut prices in the US in half, and still make good money without compromising research funds. In other words, their executives lie to us to excuse their price gouging. They are lying, cheating, and stealing.
I don't need to bring up WalMart, Halliburton, Big Oil, and Defense Contractors since these stories are well known. Lying, cheating and stealing is endemic among executives in the US.
Most recently, I am reading about Microsoft planning to layoff a bunch of people while continuing to rack up profits (about $4 bil last qtr)and sitting on $20 bil in cash. While threatening the layoffs of US workers, they are working like crazy to keep thousands of low cost foreigners on H 1B visas here in the US. That is outright sociopathic.
So with all crap going on at the executive level, it always amazes me when the US workforce which is perhaps one of the most productive in the world is usually disparaged in the press and the executive pool which is perhaps the worst in the world receives nothing but adulation. The recent bashing of the United Autoworkers comes to mind. Of course, most big company executives are good at self promotion. Often they hire firms to do nothing but that. That should not keep us from shouting the truth about one of the really damaging situations facing us as a nation. When taking a broad look at the other industrialized countries, we have grown the most undeserving, greedy, unethical, and unpatriotic executives in the world and we need to point this out every way we can. Sure there are bad apples in other nations, but nowhere is greed such a factor, and in much of Europe there is union representation at the board level which changes the game. Re-regulation can help, but it won't be enough to reform a group of people where lying, cheating, and stealing are accepted ways of behaving and offshoring or layoffs are the remedies for all problems. The sooner we face facts and begin to recognize this rot in our culture the sooner the recovery can begin.