What do oil giant BP, the mining company Massey Energy, and Goldman Sachs have in common? They're all big firms involved in massive plunder. BP's oil spill is already one of the biggest and most damaging in American history. Massey's mine disaster, claiming the lives of 29 miners, is one of the worst in recent history. Goldman's alleged fraud is but a part of the largest financial meltdown in 75 years.
All three of these companies are also publicly-held, which means that much of the financial costs of these failures will be passed on to their shareholders, many of whom are already watching their stock prices plummet. Prominently among those shareholders are pension funds and mutual funds held by people like you and me.
That may seem fair. After all, shareholders benefited when BP made big profits extracting oil without paying attention to a possible blowout, when Massey Energy got fat earnings from its careless coal mining operations, and when Goldman Sachs did wondrously well for its own stock holders by allegedly defrauding others. In fact, it was pressure from their shareholders seeking the highest possible returns -- and their executives, whose pay is linked to the firms' share performance -- that led all three companies to cut whatever corners they could cut in pursuit of profits.
But profits aren't everything, which is why we have regulations that are supposed to be enforced. So a key question in each of these instances is: Where were the regulators?
Why didn't the Department of Interior's Minerals Management Service make sure offshore oil rigs have backup systems to prevent blowouts? One clue: You may remember MMS's wild drinking parties exposed during the Bush era.
Where was the Mine Safety and Health Administration before the Upper Big Branch mine exploded? MSHA says it fined the company for a whole string of violations, but the law didn't allow fines high enough to deter the company. Which raises the next question: Given Massey's record, why didn't the Bush-era MSHA seek to change the law and increase the penalties?
Why didn't the Securities and Exchange Commission spot fraud on the Street when it was happening? Well, as we all now know, the Bush SEC was asleep at the wheel.
But don't blame it all on George W. For thirty years, deregulation has been all the rage in Washington. Even where regulations exist, Congress has set such low penalties that disregarding the regulations and risking fines has been treated by firms as a cost of doing business. And for years, enforcement budgets have been slashed, with the result that there are rarely enough inspectors to do the job. The assumption has been markets know best, and when they don't civil lawsuits and government prosecutions will deter wrongdoing.
Wrong.
When shareholders demand the highest returns possible and executive pay is linked to stock performance, many companies will do whatever necessary to squeeze out added profits. And that will spell disaster - giant oil spills, terrible coal-mine disasters, and Wall Street meltdowns -- unless the nation has tough regulations backed up by significant penalties, including jail terms for executives found guilty of recklessness, and vigilant enforcement.
After thirty years of deregulation, it's time for the rebirth of regulation: Not heavy-handed and unnecessarily costly regulation, but regulation that's up to the task of protecting the public from companies and executives that will do almost anything to make a buck.
Cross-posted from RobertReich.org
not allow it. What do you think this is.....a democracy? Are you kidding me! They
will go through the motions but not pass anything significant or if they do it will not
be enforced. Just look at the financial crisis. Where was the SEC? And those rating
agencies? Company accountants? Stock holders? No one accountable, but who has
to be when you have Congress and the President covering your losses no matter
what. I wish we all had guaranteed profit margins and legal immunity for our actions.
in a bought and paid for government populated with only get-re-elected mind sets - it's pretty much over for this country. this must be what it looked like in the empire right before rome fell........
chaos, suspicion, conspiracy theories everywhere, no jobs, no hope, and no where to go......
glad i'm old, feel bad for my grandchildren.
And we need to stop kidding ourselves about the nature of the opposition. There are a lot of people of ill-will in this country. However it happened, their minds are poisoned. They simply have to be outvoted and their influence in the public sphere has to be defeated. And it would be a mistake to think their bellicosity is only verbal.
http://www.huffingtonpost.com/al-eisele/a-gun-toting-pistol-packi_b_563675.html
Anyone of good will not wedded to pacifism ought to consider what it may take to defend ourselves, each other, what we value in life, and the environment on which we depend from their depredations. This is not a drill.
NO ONE ENFORCES THEM
DUH!
Not for being a market fundamentalist. But for not even knowing that it is part of the Chicago School gospel that without internalization of external effects, you can really watch your wet dreams about markets puff up in smoke.
I say: FIRE THEM. Today. Or at least: tomorrow.
What new regulations are better than that?
From Nixon to Reagan to Bush Sr to Clinton and Bush Jr regulations have been removed by the thousands: the rules and laws that protected our nation's economic and environmental security, and our individual safety and welfare. Isn't it time we become "heavy-handed" to get regulations re-established as they once were? It's not like we have to reinvent the wheel. We had it! We lost it!
What else has to happen in this deregulated, irresponsible, disrespectful nation? Will it be counter-revolution through political campaign and elections of a new breed of representatives of and for the People, or will it devolve into an insurrection led by sponsored bullies with unregulated lethal weapons to welcome serfdom?
Your choice. Polite and gentle or strong and heavy-handed? We don't have that much time ...
To me that is simply justice. It's not even asking for jail time.
More needs to be done to reduce the influence of politics in the bureaucracy. Bureaucrats have their own ethos, and what is important to them is not the same as what is important to politicians and business people. There can be no question about the influence of politics in regulatory enforcement over the last 30 years. We only get as much oversight as the party controlling the Administration will allow. There will be no consistency this way.
Sell a hit of crack cocaine to someone and face jail time.
Crash the world's financial system and get rich. Destroy the natural environment and get rich. Kill miners and get rich.
There should be much greater penalty for failure where greater risk is taken.
When will your justice system begin to prosecute criminal CEO's?
While we DO need regulation, a higher priority should be hiring regulators who are COMPETENT. Let's start there. Reason: the Dodd bill does NOT separate banks from their derivative trading entities; does NOTHING to reigh in Freddie/Fannie (I know Barney, they're doing fine); adds very little incremental derivative regulation.
Regulation is simply holding corporations and businesses to those same standards. Any talk of "stifling innovation" is just an smoke screen to let Wall Street, big business, and big unions do whatever they want without any consequences. All it has done is produce the greatest disparity of wealth since the Guilded Age. Laissez Faire failed 90 years ago. Supply Side/Trickle Down economics failed 30 years ago. Deregulation has failed today. It's time for everyone to accept that government regulation of business is necessary for a functioning economy.