On the Contrary

Watching Congress for the last couple of days has been quite entertaining although the destruction they are wreaking may be catastrophic.  Better yet watching Nora O’Donnell on MSNBC almost shrieking as she brow beat Representative Charlie Rangle who was in the conference committee on the TARP bill when he said he knew absolutely nothing about who took the language out of the bill to prohibit the bonuses, was watching misplaced rage out of control.  It turned out the language was removed at the request of Treasury long before it got to conference but that is beside the point.  They want someone to hang, and rational thought is not on the agenda.

The sad thing is that while the bonuses tell you everything that is wrong with the mentality on Wall Street, they are not the real problem.  The real problem is that the banks are broke, badly broke.  It may feel good to string up a few traders who helped get us there, but the reality is, they are small potatoes in the scheme of things.  The real action is getting the system working again and then fixing the systemic problems.  And just as a by-the-way, no laws were broken.  There apparently weren’t any to break.

Congress meanwhile, in wild political gyrations, is playing politics of the worst kind, opportunism.  Most Republicans went into the blame game mode to try to blacken the Obama administration and Democrats in any way they could, conveniently ignoring the fact that it was the Bush Treasury that agreed to these bonuses originally, but none of this is really important.  Some called for the resignation of Timothy Geithner.  Let’s move the chairs around on the Titanic and everything will be okay.  Meanwhile the Democrats headed them off at the pass by passing a bill to tax 90% of the bonuses in the House.  This kind of takes the wind out of the Republican’s sails because it was a problem, but was quickly remedied.  But then the Republicans found themselves caught between a rock and a hard place when they realized this was raising taxes which they had pledged to never raise and many couldn’t vote for it.  By all accounts all this is meaningless because the bill itself is most probably unconstitutional and if not, bad legislation at best.  It will never get past the Senate.

Steven Pearlstein, who is a business and financial columnist for the Washington Post wrote a wonderful article on Friday to describe why this is all about small potatoes and once again the focus is in the wrong place (Let’s Put Down the Pitchforks).  But his most important point was who was really to blame for this financial mess we are in.  We are.  When we finally get tired of lynching parties, maybe it is time to look in the mirror.

Our economy has been going strong not because we were manufacturing anything, but because we were borrowing up to the hilt and making truckloads of cash selling that debt to all comers.  Our entire economic boom was based upon creating and selling debt.  Much of the spending in the last 10 years was funded by 2nd mortgages and credit cards.  Even the investments in this debt was funded by borrowing.  While we ignored the real needs of our country by continued tax cuts, we were out with the credit card getting all those things we were entitled to and deserved.  Think about it.  It is the same mentality as the Master’s of the Universe.  They are entitled to their bonuses because they worked hard and sold all those worthless pieces of paper.  The common good is lost in all of this.  We became so selfish we all feathered our own nests while we emptied our governments and by extension, our children’s.

So what do we make of all this?  Well for the fury in Washington, we can draw the conclusion that nothing has changed.  They are still not focused on coming together to solve the real problems.  Most of our Congress thinks we can find a few scapegoats, score some political points, and things will be back to normal, meaning going nowhere.  But anyone who has ever had to manage a real program and get things done will tell you that shit happens and you make mistakes.  The way forward is not to shoot those who make mistakes, but to learn from your mistakes, correct them, and move on.  Joe Nocera in the New York Times on Saturday chronicled why what Congress has been up to is so damaging to the real problem with our economy (The Problem with Flogging AIG).  If we continue on this path we are doomed.

As I watch those who are playing the blame game, I know they have never really been put in charge of something really important and had to make it work.   The media are experts at pointing fingers when someone stumbles.  The politicians know how to cover their asses.  But none of them has ever had to build an organization and lead it.  It is not about charging forward and shooting deserters.  It is about stumbling, trying something different, making mistakes, learning, correcting, and slowly building a team that can succeed.  It is so easy to criticize and it is so hard to take the risk to lead and then be vulnerable from those that can second guess you.  It would seem that our President has figured this out, but for the rest of the rabble, the jury is still out.

So bottom line here is we should get the money back if we can, but we shouldn’t pass legislation that could be counterproductive to your whole effort.  Note this legislation affects all banks and financial institutions that took federal money and employees who did not work in these troubled financial groups.  They may opt out of the program and just sit tight which is exactly what we don’t need (See Joe’s article above).  We may eventually find out that the deal was struck when the contracts were signed and lo and behold, Treasury was right when it said we could not violate those contracts, as unjust as they are.  If that is the case, swallow hard, lick your wounds, move on. And don’t make that mistake again.  The real battle is to save the economy, not get back one-tenth of one percent of the bailout money.  Meanwhile back in Washington the circus continues and as they do what they do best, finding fault and fixing blame.  Anybody think this is progress?  We need to stop the hysterics, focus on our real problems and start moving forward behind our President instead of this endless lashing out.