Conflicts of interest are at the core of a lot of big problems in America right now. I've been watching the information coming out about Goldman Sachs and their possibly illegal 'frontrunning' trading via high-speed computers; also publicity about their alleged mis-use of bailout funds, investing them in high-risk ventures, perhaps forbidden by the terms of the bailout.
I've also been watching the publicity about the U. S. Congress -- and it's 'frontrunning' -- that is, it's skimming "campaign contributions" off the health care/insurance industries, before deciding how to vote on whatever bills emerge. It's money-before-all-things!
In both these big arenas the main controversy in play is -- Conflicts of Interest.
This isn't meant to be much of a diary, rather a drawing of issues in hopes our discussions
here on DKos can sharpen. And, I hope, our communications to elected representatives encouraged.
How many masters can you serve? There are Biblical answers, then there are real-world and up-to-the-minute answers -- and they bear a remarkably closeness in their working out.
Take Goldman Sachs -- where are their loyalties? To the owners, the share holders, for sure. But also to their clients, the people they represent in the market place. Finally, there is the matter of employees -- all of them, but I especially have in mind the six and seven figure level of employees. Out of that scramble of lines of loyalties there is much potential for confusion, snarling up of ethics and legal issues. When you come right down to it, it takes very high-minded and powerfully ethical leadership, whether corporate or political, to keep the lines of authority clear and the lines of loyalties clean. We have not seen this in the leading US banking companies or in top fiscal officials of Federal Government, at least not yet.
I do not feel comfortable with a business that knowingly presses hidden charges against clients as would be the case in 'frontrunning,' or a business that puts government (or any) money into investments that are unduly risky, or that has made and perhaps is still making, mortgage loans or credit swaps based on what now know were huge porfolios of junk mortgage loans -- "collateralized risk" I think it might be fair to call it. On this latter point we are clear -- all the big banks, insurors and investors were doing it - knowingly - expecting collapse - and indeed it came. Lemmings right off the cliff and into the sea. This has not even begun to be fully understood or accounted for in the world of finance or politics. It is realistic, I believe, to expect Goldman Sachs and other banks ultimately to be found guilty of 'frontrunning,' which is illegal, and mis-investing public funds, which is either illegal or unethical, or both. The strong probability is all the above worries are true and our only remaining question is, is there enough integrity in the American/Obama government to bring the miscreants to justice. Worst of all, we see a patchwork quilt in the financial industry of disregard for the interests of fiscal clients -- we who buy and sell securities; we are cheated and taken advantage of and the benefactors are the corporate officers and the share owners. It is one of those situations that is so big, so obvious, so egregious we sometimes describe it as 'hiding in plain sight,' or in this case stealing openly.
Now politics: the conflicts of interest in the US Congress are daily headlines. The way our government is set up, however, the entity most responsible for correcting the system and ridding it of corruption is -- Congress itself. The Justice Department can enforce laws and investigate and indict -- in the big picture Congress has to make the reforms in campaign financing as well as in the entire financial/insurance/public accounting industries that will provide the structure to secure and formalize these reforms. How likely is this to happen when the "reformers," as they must be in effect, are literally in the pay of lobbyests. It is a staggering problem.
Couple of weeks ago a thoughtful poster in this room suggested a fractional-cent tax on every share traded in US stock markets, all of them, would create so much money, hundreds of billions, so much that public financing of health care or even high-speed rail and urban transportation would be taken care of - AROUND, that is outside, Congressional control. This is simplistic and God knows where it would end up when the 'experts' got through with it, but the IDEA is exciting -- a way of diminishing the importance of Congress, of bringing some measure of humility to them. That's expecting a lot, I know.
The way our Congress and electoral system is set up, it is almost immune to any cure of its own corruption, its utterly conflict-of-interest innate corruption. And the big banks seem to own such a sense of entitlement that Secretary Geithner and others who should know better, are treating them like respectable gentlemen -- which they clearly are not.
Where is a Teddy Roosevelt to lead the necessary campaigns to address these ills? The fights and squabbles we see today in Congress will be but little compared to the resistance to a real cure for corruption in Congress. But, you know what: It's GOT to be done!