Is Financial Reform Simply Washington’s Latest Boondoggle?

By Timothy D. Naegele[1]

When I arrived in Washington, D.C. after graduating from law school in California, I spent two years at the Pentagon working as an Army officer in intelligence and budgets.  It was a great experience, and I have the utmost respect for our military, which is the best of our government.  One lesson I learned was that if Congress was breathing down the Pentagon’s neck, the easiest way to deal with the issue was to “reorganize,” which would throw them off the track—and the “bloodhounds” would lose the scent.

Then I worked on Capitol Hill as a young attorney with the Senate Banking Committee, and realized that when there was a national policy issue that was “too hot to handle,” a presidential commission would be formed, not unlike reorganizations at the Pentagon.  Months and sometimes years would pass while people studied the issues ad nauseam; and in the interim, the monkey was off the politicians’ backs.  One of my first tasks on the Hill was to staff such a presidential commission.

Fast-forward to today, and no regulatory “overhaul” is going to make a tinker’s damn in preventing future economic crises or solving the present one.  By and large, the financial regulatory agencies (e.g., the Fed, the FDIC) do a fine job, often under very difficult circumstances.  There are career professionals who will keep doing their jobs, regardless of what Barack Obama or Congress propose or enact—which is high political theater and demagoguery, and not a whole lot more.

Recent reorganizations, such as in the intelligence community, have not produced better intelligence.  Similarly, changes to the financial regulatory structure will not prevent the economic meltdown that riveted the nation in 2008, and continues to this day.  It is a tsunami, and Man’s ability to stop or affect it is marginal at best.  Reorganizing the deck chairs on the Titanic, or closing the barn door after the horse is out, will never address future problems.  The flim-flam boys of Wall Street and other financial capitals will make sure of that.

Alan Greenspan unleashed the tsunami; and the words of Giulio Tremonti, Italy’s Minister of Economy and Finance, are true and cogent to this day:

Greenspan was considered a master.  Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most.[2]

No financial regulatory overhaul will prevent a Fed chairman like Greenspan, or some other government official from making mistakes that produce massive suffering domestically and globally.  Perhaps if Paul Volcker had been in charge of the Fed instead of Greenspan, the economic meltdown would have been avoided.  After all, Greenspan admitted in testimony before the House that he never saw the housing crisis coming.

Like the emperor with no clothes in Hans Christian Andersen’s fable, no one was willing to call Greenspan a buffoon who was over his head—until he had unleashed economic pain, the likes of which has not been seen since the Great Depression.  It will continue to the end of this decade, in all likelihood; and there is nothing that government can do to stem it.[3]

With respect to the existing financial regulatory agencies, it must be remembered that they and their affiliated agencies (e.g., the FSLIC, RTC) dealt effectively with the savings and loan crisis of the 1980s and 1990s.  In the process, almost 800 S&Ls failed, an enormous financial crisis was averted, and the ultimate cost to the taxpayers was less than expected.

Nonetheless, in 1999, Congress repealed the Glass–Steagall Act, which had controlled financial speculation since its enactment in 1933.[4] Under Glass–Steagall, there had been a separation between commercial banking and “investment banking”—or gambling by Wall Street.  Coupled with Greenspan’s mistakes and financial deregulation, which had been championed by him, a laissez faire attitude in Washington resulted in the massive problems of today.

Can greed on Wall Street and in other financial markets be stopped?  Never.  Can the SEC do a better job?  Can the existing financial regulatory agencies tighten up here and there, and do their jobs better with enhanced powers?  Sure, but the system is not perfect just as human beings are not perfect.  Utopia is not possible; and history repeats itself over and over again.  More government regulation will not prevent economic tsunamis and meltdowns from happening.  Anyone who says so might try to sell you a bridge in Brooklyn next—or ObamaCare.[5][6]

Yet, capitulation to political demogoguery and public anger is likely.[7] With the repeal of Glass–Steagall and financial deregulation, a blurring of the lines between commercial banking and investment banking took place; and now the chickens are coming home to roost.  The baby is in the process of being thrown out with the bath water; and the demogogues in Washington are strutting in full bloom.[8] A Wall Street Journal editorial states:

While the details matter a great deal, the essence of the exercise is to transfer more control over credit allocation and the financial industry to the federal government. The industry was heavily regulated before—not that it stopped the mania and panic—but if anything close to the current bills pass, the biggest banks will become the equivalent of utilities.

The irony is that this may, or may not, reduce the risk of future financial meltdowns and taxpayer bailouts.

. . .

As in health care, Democrats are intent on ramming this reform through Congress, and Republicans ought to summon the will to resist. Absent that, the only certain result is that Washington will be the new master of the financial universe.

Amen, and then some![9]

© 2010, Timothy D. Naegele

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[1] Timothy D. Naegele was counsel to the U.S. Senate Banking Committee, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass), the first black senator since Reconstruction after the U.S. Civil War.  He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates (www.naegele.com).  He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University.  He is a member of the District of Columbia and California bars.  He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal.  Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years.  See, e.g., www.naegele.com/whats_new.html#articles

[2] See http://www.americanbanker.com/issues/173_212/-365185-1.html

[3] See, e.g., http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html and http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come/; see also http://en.wikisource.org/wiki/The_Emperor%27s_New_Clothes

[4] See, e.g., http://en.wikipedia.org/wiki/Glass–Steagall_Act

[5] Harvard professor Niall Ferguson and Wall Street investor Ted Forstmann state in a Wall Street Journal article:

By all means let us regulate the derivatives market—beginning with a reform that makes it a real market. And let’s clamp down on excessive bank leverage. But let us not believe we can abolish both bailouts and depressions, other than by creating another layer of government regulation.

See http://www.naegele.com/documents/BacktoBasicsonFinancialReform.pdf

I agree with their conclusion.

[6] See also https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/

[7] See, e.g., http://www.naegele.com/documents/AScoldingforWallStreetHonchos.pdf; see also http://online.wsj.com/article/SB10001424052748704830404575200580858688618.html?mod=WSJ_hps_MIDDLEThirdNews

[8] Real problems with the legislation may be considerable.  See, e.g., http://online.wsj.com/article/SB10001424052748703876404575199582764862248.html

[9] See http://www.naegele.com/documents/TheNewMasterofWallStreet.pdf

Problems With Foreign Adoptions

By Timothy D. Naegele[1]

International media organizations have reported recently about an American woman from Tennessee who adopted a young boy from Russia, and then sent him back after trying to deal with his mental health issues.[2] This episode is sad and tragic—for the child, for the mother, and for lots of innocent people—everyone knows that.  However, the deeper issues surrounding this adoption involve the inability of so many Americans to adopt children who are born in this country, and the willingness of Russia, China and other countries to foist “sick” children on U.S. adoptive parents.

Adoptions are critical to so many people.  They save lives that might otherwise be aborted; and they offer precious loving options to those people who cannot conceive children of their own.  For the adoptees, ideally they provide new parents and bright futures where there were none, and a chance to escape from the poverty and hopelessness of their countries.

A relative of mine and his wife are perfect examples of Americans who wanted to adopt, because cancer treatments had prevented one from ever conceiving again.  They desperately wanted to adopt more than one child, and they tried to adopt in the U.S. but found it was near to impossible[3], so they turned their attention abroad.  First, they adopted a baby from an orphanage in China, and all went well.  Then, they sought to adopt a second baby from another Chinese orphanage, and it was an unmitigated disaster.

The child had serious physical problems, which were not disclosed to the couple.  For a child to have “psychological problems” or to be “mentally unstable,” “violent and angry” or have “severe psychopathic issues”—in the case of the Russian boy—is tragic but not surprising.  China wants to get rid of such children, and presumably Russia and other countries do too; and it is arguable that the United States has become a “dumping ground” for these children.

It is easy to be holier-than-thou, and to tar or condemn the adoptive mother or parents as unfit and criminals, yet first those who do so should walk a mile in the person’s (or persons’) mocassins.  How would we feel, and how would we react?  I have searched my own soul with respect to that question, trying to put myself in the shoes of my relative and his wife, who are wonderful and loving people.

For the U.S. ambassador to Russia, John Beyrle, to say that he was “deeply shocked by the news” and “very angry that any family would act so callously toward a child that they had legally adopted,” constitutes pure theatrics, grandstanding and callousness by a political hack.  With the advent of ObamaCare’s healthcare “rationing,” the cost and human toll of dealing with sick children from other countries might overwhelm adoptive families and our medical system.

There should be an international agreement on the conditions for adoptions, the obligations of host families, and the obligations of those countries that seek to have Americans adopt their children.  It is a two-way street, and there is plenty of blame to share.  I do not have much patience with the Russians; and I have enormous contempt for the thoroughly evil Putin regime.[4] Hence, it is not surprising that they would seek to exploit sensitive adoption issues, at a time when they are allowing sick children to be adopted by American families.

Perhaps, the easiest way to deal with any Russian concerns is to cut off all adoptions from that country immediately.  This will stem the tide of sick children being foisted on Americans; and the same thing might be done with China and other countries, which are enormously brazen and uncaring.

A Chicago Tribune article states:

Rather than condemn the Tennessee woman, [other parents of adopted children who exhibit severely challenging behavior] are blasting adoption agencies that are not always reliable reporters about a child’s troubled past, leaving families adrift to manage extreme problems without training or options.

It includes the comment of a mother:

“I want to ask these people passing judgment: What would you do if your child threatened to kill you every day?”

. . .

Since 1991, more than 50,000 Russian children have been adopted by U.S. citizens, according to the State Department.  Add the former Soviet bloc countries, and the region is second only to China as a source of international adoptions for Americans, who are often drawn overseas by the difficulty of adopting domestically.

But prospective parents can be unprepared for the behavioral and emotional challenges that await them, explained Judy Stigger, an adoption therapist at The Cradle in Evanston, Ill.

. . .

Because children can be superficially charming and their disabilities are invisible, their problems often get blamed on “bad parenting.”  Also, adding to the uphill battle: The right kind of interventions—often not covered by insurance—can be scarce and prohibitively expensive.[5]

When Russia, China and other countries foist sick children on U.S. adoptive parents, they are engaging in brutal and callous human trafficking, which must be stopped.[6] On the bright side, my relative and his wife ended up adopting one child from China and another from Vietnam.  Both children are enormous blessings, and there is love abounding.

© 2010, Timothy D. Naegele

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[1] Timothy D. Naegele was counsel to the U.S. Senate Banking Committee, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass), the first black senator since Reconstruction after the U.S. Civil War.  He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates (www.naegele.com).  He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University.  He is a member of the District of Columbia and California bars.  He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal.  Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years.  See, e.g., www.naegele.com/whats_new.html#articles

[2] See, e.g., http://online.wsj.com/article/SB10001424052702304222504575173741062876452.html?KEYWORDS=Russian+adoptions#articleTabs%3Darticle

[3] In at least one instance, a birth mother “interviewed” them, and then she backed out.  I remember their frustrations with the American adoption process, so they went abroad.

[4] See https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/

[5] See http://dailyme.com/story/2010041500002200/overseas-adoptions-blessing.html

[6] See https://naegeleblog.wordpress.com/2009/12/28/human-trafficking/

The Catholic Church At A Crossroads

By Timothy D. Naegele[1]

When my father’s ancestors first came to America from Rottweil, Germany in 1849, they consisted of a husband and wife who had sixteen children, and were Catholics.  Sometime early in the 20th Century, the family moved away from the Church because of tithing—or so I was told—and became Lutherans.

On my mother’s side were Scots, Irish and English, many of whom were Catholics too.  My mother was an Episcopalian and my father sang in a Lutheran choir in Minneapolis where they met in grade school, but I grew up with kind feelings toward the Catholic Church.  My first two girlfriends were Catholics, which has been true of others since.

Fast forward to April of 1983, and I met a lovely Irish woman in Dublin, and we spent many years together.  She had attended Catholic schools, but would not set foot in a Catholic church in Ireland because of what she had witnessed as a young girl, and because of what she described as the “hypocrisy” of the Church (e.g., a high ranking Church official had a “wife” and child).  Later, I met another Irish woman whose closest friend had been impregnated by the local parish priest, and she had given birth to his child.

When the reports of pedophilia and other child abuses began to surface dramatically in the US and Ireland, I was not surprised.  Obviously the victims had suffered more than any of us can fathom.  I discussed the issue with someone who was much more knowledgeable than I was; and the person emphasized that being a Gay priest was different than being a pedophile.  Also, nuns committed child abuses in large numbers, certainly in Ireland.

One of my close Catholic friends pointed out some years ago that the Church had taken steps to remove pedophiles from its ranks, which was long overdue.  Also, I believe the Church-made rule of celibacy has outlived its usefulness and should be jettisoned.  The earliest Christian leaders were largely married men; and the Church’s hierarchy today should include the married and unmarried, both men and women.

Some people argue that the latest crises might bring down a Pope.  Surely, the Church has withstood other assaults throughout history, and it will withstand this one too.  The Church’s supporters will continue, while its detractors and haters will be present too.  The larger issue is whether true reform is possible, after the latest “blood-letting” about pedophilia has passed.

In many ways, the Church is like a giant oil tanker or aircraft carrier that cannot be turned on a dime.  In a sense, this is good because it is not blown off course by the societal trends or scandals of the moment.[2] As the enormous worldwide force that it is, the Church makes changes incrementally, not dramatically or overnight.  Pedophilia and child abuses of any kind must be condemned and never happen again.  The task today is to rectify the wrongdoing and bring the wrongdoers to justice, and to institutionalize lasting reforms.

The hard-earned monies of parishioners should not be used to pay the Church’s legal fees or legal settlements with the victims.  Instead, the monies should come from the Church’s vast coffers and resources worldwide, which are invested in office buildings, other real estate and the like.  When I attend Catholic churches regularly—which I do, even though I am not a member of the Church—I see Hispanics and other devout worshippers contribute what little money they have.  To use such monies to address the Church’s wrongdoing seems morally wrong and repugnant.

Next, there are vast numbers of child prostitutes in the US and throughout the world[3], who are victims of human trafficking[4].  Just as pedophilia must be stopped in its tracks, so too must human trafficking of all types, and child prostitution and pornography[5].  The Catholic Church can take a leadership role worldwide with respect to all of these issues—which is long overdue.  Its moral obligation to do so is clear.[6]

Lastly, one’s religion is very personal, and mine certainly is.  I do not want anyone telling me how to worship or what is important; and most people feel exactly the same way.  Any thoughts I have about the Church represent an effort to move beyond the scandals of today, and to seek a brighter future.

© 2010, Timothy D. Naegele

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[1] Timothy D. Naegele was counsel to the U.S. Senate Banking Committee, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass), the first black senator since Reconstruction after the U.S. Civil War.  He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates (www.naegele.com).  He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University.  He is a member of the District of Columbia and California bars.  He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal.  Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years.  See, e.g., www.naegele.com/whats_new.html#articles

[2] I have been drawn to the Church more and more over the years because among the American churches, at least it stands for issues in which I believe, such as the sanctity of life and family values.  We live in a society today that is guided too much by secular values, with which I do not agree.  If it feels good, do it—or so many people believe.  God has been driven out of our children’s classrooms and elsewhere in society. and I do not agree with that.

Until Ronald Reagan focused public attention of the right to life as opposed to abortions that were often a matter of convenience, I had never given much attention to the issue.  If anything, I just went along with the idea that abortions were OK, as well as a woman’s right.  Then, I saw a film about the birth of a human being, from almost the moment of conception to when it emerged from the womb.  How it was filmed, I do not know, but I will never forget it.  At about the same time, I read an op-ed piece in the Los Angeles Times (as I recall), written by a doctor who had performed lots of abortions, many of them late-term.  He gave up his medical practice because he was having nightmares and other reactions, and I was stunned by his words.

I defy anyone to define with precision when a human life begins, and when an abortion constitutes something other than the taking of a human being.  For me, life begins with conception; and thereafter, I believe this life is taken if an abortion occurs.  Should that act be criminalized, or does a woman have the right to have it done?  These are heady issues, with respect to which people disagree, sometimes violently.  I side with the Catholic Church, and feel that adoptions are preferable to abortions.  A cousin of mine and his wife found it almost impossible to adopt in the U.S., and were forced to adopt two children from Asia, whom they love unconditionally.  Clearly, there are many loving American couples who would welcome the chance to adopt someone else’s child.

[3] See, e.g., http://www.justice.gov/criminal/ceos/prostitution.html

[4] See, e.g., https://naegeleblog.wordpress.com/2009/12/28/human-trafficking/

[5] See, e.g., http://www.justice.gov/criminal/ceos/childporn.html

[6] Former President George W. Bush took a leadership role in dealing with the issue of human trafficking; and the Catholic Church must do the same.  See, e.g., http://www.justice.gov/criminal/ceos/trafficking.html