To find the "whodunnit" of our current economic crisis, look no further than the corporate boardroom.
Far from serving as checks-and-balances, today's corporate directors are under thumbs of the CEOs who selected them. With unquestioned power and ever increasing arrogance, CEOs can take unnecessary risks, hide details of bad investments, and pay out excessive bonuses to themselves and top executives regardless of their job performance.
That's how subprime mortgages and credit default swaps were hatched. That's how Bank of America's Ken Lewis kept details of Merrill Lynch's poor health and plans of multi-billion dollar bonuses from shareholders. That's how the initial nine banks that got TARP money could pay out $32.6 billion in bonuses last year despite getting a $175 billion dollar bailout from taxpayers.
While shareholders, and now taxpayers, pay the bills for the corporate elite, they have little real power to punish recklessness and corruption. Our undemocratic system of corporate board elections ensures that even when a majority of shareholders votes for change, oftentimes CEOs and their hand-picked directors can ignore the results and keep the status quo.
And that's just the way US Chamber of Commerce President Tom Donohue wants to keep it.
As Americans continue to face furloughs, layoffs, and dwindling savings, as millions find themselves unable to afford the homes that banks enticed them to buy with tricky mortgages, and as states and cities cut services as a result of declining tax revenue, CEOs and the Chamber remain unrepentant, unremorseful, and if they get their way, unregulated.
They're against President Obama's plan to protect consumers from harmful or predatory mortgages, credit cards, and other financial products. They've fought hard for years to keep the SEC weak, underfunded, and unable to protect investors from the Bernie Madoff's of Wall Street. And now they're fighting tooth and nail to stop shareholder democracy and keep corporate boards unaccountable.
Tom Donohue's service as a board member for companies plagued by accounting scandals, insider trading investigations, and massive shareholder losses makes it clear why he and the Chamber should fear the change America needs:
At Qwest, Donohue's committee approved a $12 million severance package in 2002 for former Qwest Chairman and CEO Joseph Nacchio at a time when the company's stock price was at an all-time low, its bonds had been downgraded to "junk" status, and its accounting practices were under investigation by the SEC. Nacchio is currently serving a six year prison sentence for insider trading at Qwest, a conviction the Chamber is seeking to overturn in a brief filed with the U.S. Supreme Court.
After Mr. Nacchio's unceremonious departure, the Qwest board approved a "golden handshake" for his successor, Richard Notebaert, who received an option grant worth an estimated $16 million before serving a single day in office. During Donohue's four years on Qwest's board, shareholders lost $62 billion.
And at Sunrise Senior Living, where shareholders have seen their shares tumble almost 94% in just over three years, the company reports that it is discussing resolution of a two-year SEC investigation into improper accounting, improbably timed stock options granted by Donohue's committee, and fortuitously timed insider stock sales by Sunrise officers and directors. The company recently paid $13.5 million to settle parallel shareholder litigation alleging that Donohue himself was among those who received backdated options and engaged in insider trading.
In this era of unbridled CEO rule, union-sponsored pension funds have stood up and made headway against the odds: they've helped rein in runaway executive pay and they've forced corporate boards to be more independent and accountable.
The SEIU Master Trust, a consortium of pension funds, originally raised concerns about those suspiciously timed option grants and stock sales, and filed a suit which resulted in Sunrise shareholders getting the right to vote on whether directors have to stand for election each year. The Master Trust's proposal to vote on directors yearly passed overwhelmingly.
Earlier this year, in one of the most contentious annual meetings in Bank of America's history, the SEIU Master Trust led a successful shareholder campaign to force CEO Ken Lewis to resign as Chairman of the Board. This was the first time ever that shareholders made a binding change to the by-laws of an S&P 500 company through a democratic election.
Real shareholder democracy and effective public regulation must become the rule, and not the exception, if we're going to rebuild a stable economy for the long term.
After all, if there are truly some companies and banks that are "too big to fail," where taxpayers must bail them out after their reckless behavior endangers their survival and our prosperity, then isn't that all the more reason to insist shareholders and taxpayers can hold the corporate elite directly accountable?
Tom Donohue and his CEO allies might not think so, but America can't afford their reckless and selfish behavior any longer. We need Congress to reform our financial system, fund strict enforcement of the rules, and give long term shareholders the power they need to reign in the out-of-control corporate elite.
Let's stop this cycle before more jobs are lost, more homes are foreclosed, and more retirement accounts are wiped out. Let's stop Tom Donohue and his CEO friends before they wreck our economy again.
Follow Anna Burger on Twitter: www.twitter.com/SEIU_AnnaBurger
Alicia Whitaker: Succession Planning 101: Lessons for the Bank of America
Succession planning has moved from being a largely academic exercise to an element of corporate governance that regulators and investors demand.
People need to fully comprehend that virtually all of the gains of American business since Reagan have gone to the rich and powerful, not the workers who actually tote the bale and pull the barge.
The latest financial crisis is but another manifestation of pushing more millions of middle class Americans into poverty, losing their jobs and houses.
Most of this has come about because Boards of Directors and government regulators have become captive to business CEO's. CEO's pick their own boards who approve the CEO's pay package. And government oversight has all but disappeared.
Which is all pretty peculiar, since corporations are government chartered entities and government (meaning we the people) can require businesses to comply with any regulation we desire. And our main desire should be the requirement businesses must advance the interests of our society, and astronomical corporate pay does not advance the interests of our society.
A substantial part of the problem is that we the people pay money to the corporations when we need their services, and the corporations contribute money to our politicians when they need their services. We're at total odds with our own politicians. Whereas we pay corporations, corporations pay our politicians. So additionally, we badly need campaign finance reform.
A comment on this, even some Republicans [very few!] are starting to admit that their policies have not been good for middle America.
I listened in amazement yesterday to David Frum, Bush's former speech writer who now works for the America Enterprise Institue. The AEI is about as far right as you can get without falling off the edge of the earth.
Frum was commenting on Bush's economic record and said that although it would be years before the verdict was in, the economic numbers were already shaping up to be worse then Carters. One of the things he talked about were the dismal numbers for middle Americans, the loss in earning power and their losing ground.
Now That. was some mea culpa for a Republican.
The rest of us, the bottom 90 aren't ever considered in all this other then how these financial institution can wrest what wealth we have left into their ever expanding coffers.
Make no mistake about this, it's class warfare.
Not one of those campaign promises has been honored.
Corporations and Chambers of Commerce don't cry when people become disabled and die because of poor health care.
Corporations and Chambers of Commerce don't lose sleep when people spend their retirement savings on lifesaving cancer treatment for their insurance-less twenty somethings who thought they were invincible and didn't begin to make enough to buy health insurance anyhow.
Corporations and Chambers of Commerce don't hope with every ounce of their spirit in a better future for individuals or societies. Or countries, like America.
Only people do that. Corporations and Chambers of Commerce are mere things. Entities. Business models. They exist for one reason and one reason only: to make a profit. Making a profit is only part of being a human.
Corporations are not people, and it's time to stop giving them the benefits of people, when they pay none of the costs.
Mexico, ruled by six Aristocratic families for 600 years to produce a populace of Peons doing the bidding of the ruling class. The Aristocrats didn't even give them jobs - only taught them to raise corn.
There's alot of economic engineering going on and the American people are not even aware of what the outcome will look like, and don't even know they are being had.
Do you not see how the government has always divided Americans? Black/white, rich/poor, young/old and the beat goes on.
We are heading toward being serfs and too many of you seemingly intelligent people have your eyes closed. We are Americans, we are no worse than any other country; as a matter of fact, better than most if not all. We do more to alleviate hunger and cruelty in this world than any other government. You have bought into the rot being handed to you by foreign countries (jealous) of our success and pseudo intellectuals indoctrinating from on high.
All I ask is that you look at all sides and make your very own decision. If you decide that Communism/fascism/totalitarianism, etc. is for you, please go to where you will be happy and not take away what makes me happy. That, in a nutshell, is the difference between libs and Conservatives. We don't bind anyone whereas all the left ideas, bind and prevent personal choice.
Unions were very necessary years ago but now they are just one more way to enslave people and get rich in the process.
Health care? You think that's the problem? Look again, my friend, the problem is the same one on a larger scale that I have with IRS...it is too invasive and I am entitled to privacy as a way in my pursuit of happiness....no, the public/gov does not have a RIGHT to know. One should never give power away and knowing everything about people is definitely giving power away and enabling people to shut you up or whatever if you don't go along. Read history. Most (if not all) atrocities in history have been done by governments with too much power.
Without Unions we would have the same work environment our parents faced during the depression.
People, Plutocracy or Democracy
Choose!!!!!!