Anderson@Large

Financial Meltdown: Moral Hazard Ahead

Everyone did it. That was the excuse of the Wall Street greed merchants who are responsible for the current financial crisis.

Though it will make you want to reach for the pitchfork, Frontline’s “Inside the Meltdown” is must-see TV.

The program didn't instill any confidence in Treasury Secretary Tim Geithner’s ability to fix this mess. As president of the Federal Reserve Bank of New York, Geithner had a front row seat as Wall Street was pigging-out on mortgage-backed securities.

Geithner signed off on the $30 billion bailout of Bear Stearns, which was choking on subprime mortgage loans and a hidden stash of credit default swaps worth hundreds of billions of dollars.

The Wall Street greed was supposed to be tempered by the notion of moral hazard. So if you bail someone out of a problem they created, there will be no incentive not to make the same mistake.

Moral hazard is ahead a thing of the past. The Wall Street bailout has spawned a run on the American taxpayers’ bank by CEOs who have run their companies into the ground. A Rasmussen poll found 64 percent of Americans oppose giving any more of their money to automakers.

The PBS program includes on a disturbing note:

So far they have spent $350 billion. They say they will spend trillions more and still no one knows whether it will be enough.

Next in line: homeowners who also bet on the housing bubble and lost.

The Remaking of America

On President Barack Obama’s first full day in office, an Associated Press-Knowledge Networks poll found 67 percent of Americans, including 47 percent of Republicans, are hopeful and optimistic.

Obama has wasted no time tackling the boatload of problems he inherited from George W. Bush. From Wall Street to Main Street to the Middle East, Obama has to clean up Bush’s mess.

Obama has to rescue the faltering economy, prevent foreclosures, create four million jobs, save the auto industry, and keep hope alive.

But the federal coffers have been bled dry as a consequence of endless wars and “irresponsibility on the part of some but also our collective failure to make hard choices and prepare the nation for a new age.”

To paraphrase the Notorious B.I.G., “More power, more problems.”

Though Obama’s plate is overflowing, he must not forget the least of these. As Women’s Media Center President Carol Jenkins writes:

Barack Obama, in one sense, remade America by taking the oath. But the most important messages of this historic inaugural were not words—they were acts. On Monday here in Washington, D.C., we celebrated the birthday of Martin Luther King, Jr. Then still President-elect Obama took a paintbrush to the walls of a shelter for homeless teens—part of the declaration of a day of service in memory of the slain civil rights leader. Thousands more across the city did the same.

This is our true mission as we leave the scene of great celebration: to remember the homeless we saw sleeping in doorways as we made our way to the fancy inaugural balls last night. To determine acts to accompany the words that will counter the deepening economic distress we woke up to this morning—affecting, increasingly, not only the anonymous buried in the statistics, but people we know, perhaps even ourselves. To remember the women, still the poor and vulnerable of the world. And to remember that ever more importantly, we must tell their stories—tell them straight and strong so we move people to act, as well as think and feel.

Indeed, but for the grace of God go I.

Obama’s Jobs Bank

While Chrysler is closing all of its plants for one month, President-elect Barack Obama is hiring. Some constituent groups continue to wonder whether they will have a voice in his administration.

Women are raising their voices. The New Agenda, a nonpartisan organization for women’s rights, is keeping track of Obama’s Cabinet appointments. Amy Siskind, co-founder of the group, said in a statement:

To date, Obama has appointed only four women out of 16 18 announced cabinet positions. At this rate the President-elect would need to fill all remaining positions with women in order to achieve near gender parity.

Siskind’s concerns were echoed by WomenCount:

In recent days we have been urged by some of our colleagues in the world of women’s advocacy to call attention to President-elect Obama’s failure to nominate more women to his Cabinet. Rather than speak out, we have given him the benefit of the doubt and encouraged others to do the same - until now.

With this week’s announcements, the new Cabinet stands at 14 men and 4 women. That puts the current percentage of women in the Obama Cabinet at 22 percent - and there are only four Cabinet-level openings left to fill.

President Clinton’s first Cabinet - 16 years ago - was 37 percent women. In his second term, it climbed to 47 percent women. President Bush began his first term with 22 percent women in his Cabinet. We want that number to go up - not go down or stay the same!

Some more math: women make up 51 percent of the American population and 56 percent of voters. In the 2008 presidential election, women voted for Obama 56 to 49 percent over men.

Dozens of qualified women have been recommended to fill critical slots on the incoming leadership team.

We urge the President-elect and his transition team to act now to improve their record of commitment to naming women to senior positions in the new Administration. It’s not too late.

Such a lack of progress for women underscores the need for real change – now.

WomenCount is also calling on Obama to establish a Presidential Commission on Women during his first 100 days. To sign the petition, go here.

Big Three Rev Up Their Beg

The CEOs of the Big Three automakers are in DC this week begging for a $25 $38 billion bailout “bridge loan.”

Unlike the last go-round when they were hanged together, the automakers are hanging separately (here, here and here).

The Senate Banking, Housing and Urban Affairs Committee held a hearing on their rescue plans yesterday. The CEOs are cooling their jets before the House Financial Services Committee today.

While the automakers submitted separate business plans, they got a jump start from the Engine of Democracy coalition, which is mobilizing grassroots support for the, er, "federal bridge loans." The coalition says it is “self-funded and receives no funds from Chrysler, Ford or General Motors.”

My friend William Reed isn't reticent about touting the support African Americans receive from the Big Three. Bill recently wrote:

Among African Americans the Big Three’s multiplier effect among is critical. Black workers, contractors and consumers have a stake in how Congress reacts to Detroit’s plight. “Just do it” is what Randi Payton, publisher of African Americans on Wheels, suggests. He says they are “some of the most socially responsible corporations in the world” and because of how they impact African Americans emphasizes their “big stake” in how Congress acts on the issue. Payton says, “Social responsibility has long been a hallmark of the industry. The Big Three have consistently supported social and community initiatives, as well as small businesses. Next to the Federal government America’s automotive industry leads in embracing diversity and employment of minorities.”

As of September 2008, the motor vehicle and parts industries directly employed 732,800 workers and were one of the largest economic generators for African Americans. The argument Payton puts forth is that the Big Three and their reciprocity toward African Americans should be measured by blacks as to how these companies help in our communities compared to where the $750 billion Wall Street operatives got from the government goes.

The automakers failed their first test drive and were told to “hit the road Jack.”

Under their spanking new restructuring plans, the Big Three want taxpayers to make as much as a $38 billion down payment. In return, the CEOs promise to cut tens of thousands of jobs, shut factories and close dealerships.

With a CNN-Opinion Research poll showing 61 percent of Americans oppose a federal bailout, lawmakers remain skeptical about taking a ride on Detroit's “freeway of love.”

Big Three Ain’t Too Proud to Beg

The CEOs of the Big Three automakers were back on Capitol Hill yesterday rattling the tin cup. Like the welfare queens of yore, they traveled to DC in style.

The CEOs of General Motors, Ford and Chrysler flew in separately on their $35 million private jets to beg Congress for a $25 billion bailout. They claim they’re running out of cash.

But some want to run them off the road. Rep. Gary Ackerman castigated them for their profligacy:

There’s a delicious irony of seeing private luxury jets flying into DC, and people coming off of them with tin cups in their hands, saying that they’re going to be trimming down and streamlining their businesses. It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. Kind makes you a little bit suspicious as to whether or not…we’ve seen the future. There’s a message there. Couldn’t you all have downgraded to first class or jet-pooled to get here? It would have at least sent the message that you do get it.

Michael Moore, writer, producer and director of “Roger and Me,” skewered the less than dynamic trio on CNN’s "Larry King Live."

Moore continued:

They don’t believe in free enterprise or free market. They want socialism for themselves. They want a handout and a net for themselves. To hell with everybody else, but give it to them.

ABC News’ Brian Ross broke the story of the corporate excess. He told King:

This is the way all three of the CEOs live. They talked about sacrifices. They talked about the sacrifice of laying off tens of thousands of their workers. They’re not talking about their own sacrifices…For a company that says it’s running out of cash, it seems incongruous.

It’s indeed incongruous to ask taxpayers, who have to pay for a bottle of water on a cramped commercial plane, to bail out auto execs who are cut from the same fine cloth as AIG executives.

Consider: a new Rasmussen poll found that Americans have flipped the script. Forty-eight percent think the failure of General Motors would be good for the country.

With the cancellation of the Senate vote, the wheels are coming off the Big Three's attempt to gas up at the public pump.