The State Bar Of California Is Lawless And A Travesty, And Should Be Abolished

8 09 2014

 By Timothy D. Naegele[1][2]

When I took and passed California’s bar examination and became a lawyer and a member of The State Bar of California, I was very proud of what I had accomplished.  I worked hard in law school at Berkeley—and later at Georgetown, for a second law degree—and I considered it an honor to be a member of the State Bar . . . but not anymore.  Under former California Governor Pete Wilson, for all intents and purposes, it was put out of business; and its uselessness was exposed for all to see, like the emperor in Hans Christian Andersen’s fairy tale, “The Emperor’s New Clothes.”[3]

This stinging indictment should have been a wake-up call for California lawyers.  However, the State Bar has come roaring back with a vengeance; and it is worse than ever, and a true disgrace.  Once again it is a “rogue” trade association; a waste of its members’ and taxpayers’ monies; and a travesty.  It should be eliminated permanently, with its staff sent looking for other jobs.[4]  Or at the very least, it should become voluntary, with its disciplinary functions transferred to an independent arm of California’s Supreme Court—and its present staff of rogue prosecutors eliminated completely.

Today, I am ashamed to be a member of the State Bar; and I never thought that I would come to that conclusion.[5]  It is like belonging to a private club that discriminates, and is run by an inbred clique or cabal.  At best, it is a third-rate trade association—and Sacramento and Washington, D.C. are full of them.

Undergraduates in colleges, and others who enter law schools in California, have been lulled into the belief that being a lawyer is some “magical” ticket to success—which it is not—and that it is an honorable profession to join.  What they do not realize is that very successful lawyer friends of mine and I have recommended for many years that our kids and others never become lawyers or practice law . . . albeit I am proud of what I have accomplished as a lawyer.[6]

The value of this advice will be even more evident as California’s economy deteriorates during the balance of this decade, and fewer Californians are able to afford legal services.  The State Bar has defrauded would-be lawyers by failing to disclose that the debt obligation a legal education entails may encumber the students (or their parents) for much of their lives, and there may be no jobs when they graduate.[7]

A $15-an-hour job as a non-lawyer will not service a $150,000 debt incurred during law school, yet the State Bar never discloses this because it is knee-deep in fraud itself.  The first goals of any trade association are to perpetuate its existence and full-time employment for its staff members, which the State Bar has been doing with gusto since it essentially went out of business.[8]

Also, the State Bar has done almost nothing to police abuses by lawyers in California, relating to fraud in mortgage lending and other activities.  It has wasted valuable resources pursuing “minnows,” all the while allowing the “big fish” to escape unscathed.  It has never gone after the lawyers at Countrywide who participated in and/or condoned predatory lending practices; and one of Countrywide’s lawyers even testified on the State Bar’s behalf in a predatory lending case[9].

Equally disturbing, disconcerting and odious is the fact that divorce lawyers prey sexually on their vulnerable and distraught clients.  They should be automatically disbarred; and the State Bar is culpable and morally reprehensible for failing to act.  As in the case of other professionals—such as medical doctors and psychiatrists who prey on their vulnerable patients—the most stringent sanctions must be imposed, but they are not.  The State Bar turns a blind eye, which undermines any notions of morality and propriety that it purports to represent.

Its failure to disbar these divorce lawyers is inherently repugnant.  Women’s rights organizations especially should be up in arms, protesting the State Bar’s culpability.  Anyone is vulnerable during divorce proceedings, and this is particularly true of women.  Yet the State Bar does nothing.  If some lawyers can act with impunity in the context of divorces, what use is the State Bar to society—or to those lawyers whose conduct is above reproach?

Unlike the District of Columbia Bar, of which I am proudly a member—for example, because (1) it is more prestigious, with its members being recognized on a nationwide and worldwide basis, and (2) it does a far better job, and (3) its members are charged much less in terms of annual dues—the State Bar forces its members to satisfy Continuing Legal Education (“CLE”) requirements every three years, which is absurd.  Financial “kickbacks” are standard for the State Bar, which is a travesty unto itself; and mandatory CLE is merely one example.

Most CLE courses that are required have no bearing whatsoever on a lawyer’s legal specialty and practice.  Over the years, I have never seen a successful lawyer who failed to keep up with the nuances of his or her specialty.  Indeed, truly proficient lawyers do it each and every day that they practice law; and there is no need to take mandatory CLE courses to accomplish this.  Quite to the contrary, it is a waste of time—but the State Bar mandates this because it enhances the State Bar’s financial coffers and insures the perpetuation of the trade association’s existence and power.[10]  

The contrast between the State Bar and the District of Columbia Bar is striking in almost every respect.  Aside from costing much more, the State Bar is grossly inefficient in serving its members.  For example, I received a check from a purported “client” in what turned out to be a fraudulent “phishing” scam; and I contacted both bar associations to ask what I should do with it, ethically.  The D.C. Bar got right back to me; and one of its attorneys was very thoughtful and helpful.  No one from the State Bar ever called me back, and I gave up trying to reach them.

To say that the State Bar is totally worthless—and lawless, and does not pay its bills—is not to exaggerate one iota.[11] When I was sworn in as a California lawyer, I was in awe of the State Bar.  However, this has not been true for many years.  It is just one more fraudulent trade association, whose existence is perpetuated to serve its staff members above everyone else.  Lawyers are held in low esteem today, inter alia, because rogue organizations like the State Bar exist, which are bankrupt morally and ethically.

Its support from financially strapped Californians and the equally strapped State of California[12] is wasted and must be eliminated completely; and its membership must become voluntary, at best.  Clearly, enough political forces coalesced to effectively put the State Bar out of business when Pete Wilson was California’s governor.  The same thing must happen now—this time to accomplish the job once and for all, and eliminate what is probably the most corrupt and diabolical trade association of its kind in the United States.

In a quotation attributed to the Irish-born statesman Edmund Burke: “All that is necessary for the triumph of evil is that good men [and women] do nothing.”  California lawyers must rise up and say enough is enough, and mean it this time.  Perhaps it is naïve, optimistic and idealistic to believe this will happen, but hopefully not.  American justice requires nothing less.[13]

© 2014, Timothy D. Naegele

Ban State Bar of California


[1] Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass).  He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates, which specializes in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see www.naegele.com and http://www.naegele.com/documents/TimothyD.NaegeleResume.pdf).  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), and can be contacted directly at tdnaegele.associates@gmail.com; see also Google search: Timothy D. Naegele

[2]  Note: The author has held these personal opinions for many years, probably since the State Bar was effectively put out of business (see infra n.3), and he and other members woke up to problems with the Bar.  The author paid dues, but worked full time in Washington, D.C. then, and did not pay much attention to the Bar.  He began drafting this article in 2012, long before he heard the names Erin McKeown Joyce, Thomas A. Miller or Lucy Armendariz; and he made refinements (i.e., principally to its footnotes) before it was published here.

[3] See http://en.wikipedia.org/wiki/State_Bar_of_California#Member_fee_authorization_process (“Member fee authorization process”) and http://en.wikipedia.org/wiki/The_Emperor%27s_New_Clothes

[4]  Two general counsel (i.e., “the State Bar’s lawyer,” or chief legal officer) have served during this time frame: Joseph Starr Babcock and Thomas Allen Miller.  Babcock came in to pick up the pieces after the State Bar essentially went out of business; and Miller came on board recently after practicing law.

Miller has taken a “hands’ off” approach, by saying that his “Office of General Counsel” has no “direct involvement” with “the exclusive jurisdiction of the Office of Chief Trial Counsel,” despite the fact that Miller was told by the author that (1) one of his lawyers in the latter office—Erin McKeown Joyce—has totally ignored the law nationally, as enunciated by the U.S. Supreme Court, the Ninth Circuit and California’s Supreme Court; (2) the State Bar owes the author a substantial sum of money stemming from his deposition testimony as an expert witness, and payment is required by a California statute; (3) another member of the State Bar is reportedly subject to criminal prosecution for fraud, Lloyd J. Michaelson (SBN 94145), yet no actions have been taken by the State Bar; and similarly (4) the State Bar has not taken action against a second attorney, Richard H. Lubetzky (SBN 154032), even though he suborned perjury with respect to testimony before the State Bar, and his troubled history with the State Bar began before his admission to the Bar.  See, e.g., http://articles.latimes.com/1990-07-25/news/vw-1012_1_state-bar; see also infra n.11.

See, e.g.http://www.vcreporter.com/cms/story/detail/a_paramount_problem/8566/ (“The suits claim that from 2008 through early 2010, defendants Nicholaus Skultety and lawyer Lloyd Michaelson were scamming millions of dollars from individuals and businesses across the United States by fraudulently promising to fund construction projects in exchange for an up-front cash fee of 2 percent of purported loans. . . . Various people . . . , including some of the alleged victims, said they have been in contact with the FBI”) and http://redcatsboards.yuku.com/topic/34142/Local-men-charged-in-real-estate-loan-scam#.UOyJ5LtWpkg (“Local men charged in real estate loan scam – Complaint says they collected fees for loans that were never delivered”) and http://www.californiarealestatefraudreport.com/archives/date/2011/03

While Miller may be competent, and the “new kid on the block,” he is in charge now.  If he will not take actions (1) to rein in abuses by lawyers in the “exclusive fiefdom” of the Office of Chief Trial Counsel, and (2) to address other serious problems with the State Bar—and he allows such problems to fester—who will?  Ultimately, he is responsible and the buck stops with him, yet he is turning a blind eye to wrongdoing by those who work for him.  Indeed, others beneath him have taken the State Bar down a path that must end.  Investigations by California’s legislature and its Governor are warranted and needed; and there must not be a “whitewash.”

[5] The author has debated for some time whether to go “inactive,” or resign from the State Bar altogether.  He applauded the actions that essentially put it out of business.  While it may be best to fight it from within—because only a relatively small number of lawyers know how truly corrupt it is—the State Bar costs the author money, and it wastes his time satisfying useless CLE requirements.

Since being admitted to the State Bar, the author has handled very few matters in California, and less than a handful for individual clients.  Mostly, he has purchased banks there from the federal government for large business clients located elsewhere in the U.S. or overseas; served as an expert witness for the FDIC, in connection with a failing national bank case; and served as a special consultant to the State on banking matters, during the first administration of Governor Jerry Brown.

[6] See https://naegeleblog.wordpress.com/2013/07/15/justice-and-the-law-do-not-mix/  (see also the footnotes and comments beneath the article) and http://www.naegele.com/documents/Twill-Naegele-JusticeAndTheLawDoNotMix.pdf  (“Justice And The Law Do Not Mix”); see also http://www.naegele.com/documents/TimothyD.NaegeleResume.pdf

[7] See https://naegeleblog.wordpress.com/2011/01/03/the-american-legal-system-is-broken-can-it-be-fixed/ (“The American Legal System Is Broken: Can It Be Fixed?”) (see also the footnotes and comments beneath the article)

[8] If one looks hard enough at the State Bar’s Web site, its staggering budget is set forth, although nowhere is an overall summary presented.  See, e.g., http://www.calbar.ca.gov/AboutUs/Reports.aspx (“2015 Proposed Final Budget”).  Its members must be provided with such information in great specificity, because they pay dues; and the public must be as well, because the State Bar’s budget is part of the General Fund support for California’s judicial branch.  Also, funds for the State Bar should be eliminated entirely.

For 2015 alone, more than $5 million is shown for the Office of General Counsel, even though the State Bar’s lawyer apparently will not “intrude” in the activities of his lawless Office of Chief Trial Counsel (see infra n.4 & 11), whose budget for the same period is shown to exceed $30 million.  Both individuals are shown to earn $200,000 per year.

At the State Bar’s Web site in July, 2014, it was stated:

The bar’s programs are financed primarily by fees paid by attorneys and applicants to practice law. In 2011, the bar’s general fund budget was more than $64 million, over 75 percent of which funded the bar’s attorney disciplinary activities.

See http://www.calbar.ca.gov/AboutUs/StateBarOverview.aspx (“How is the State Bar funded?”).

Surely, the State Bar must cite figures that are more recent than three years old; and 75 percent of “more than $64 million” equals almost $50 million.  This means that the Office of Chief Trial Counsel’s budget is likely more than that amount today, rather than the amount shown in the “2015 Proposed Final Budget.”  And this money is paid to rogue prosecutors, who are seeking as many “scalps” as they can take.  Not many lawyers can afford to fight this vicious and unholy juggernaut.  See infra n.11.

[9] James Goldberg of Bryan Cave LLP, San Francisco, represented related persons and entities—for example, Bank of America, N.A., Countrywide Home Loans, Inc., ReconTrust Company, Mortgage Electronic Registration Systems, Inc. and Kelly Germa (hereinafter referred to collectively as “Countrywide”)—which have been defendants in a lawsuit alleging predatory lending and fraud; namely, Kaleb v. Bank of America Home Loans, et al. (U.S. District Court for the Northern District of California, Case No. 3:09-cv-05958-RS).

In turn, Goldberg testified on behalf of the State Bar in a predatory lending case before the State Bar Court, In the Matter of Sharon Lapin, 165919, A Member of the State Bar, in which Countrywide’s wrongdoing was an issue.  Clearly, the State Bar has zero problems with (1) allowing the “fox” into the “chicken coop,” and (2) not pursuing the lawyers at Countrywide—which was headquartered in Calabasas, California—for their wrongdoing, despite the fact that Countrywide has been the “poster child” for fraud in America’s mortgage lending scandals.  Also, all of this occurred before State Bar Court Judge Lucy Armendariz, who presumably had no problems with it either.  See also infra n.11.

[10] Instead of eliminating CLE requirements altogether, the State Bar has actually advocated increasing them, which is patently absurd—and simply underscores how irresponsible the State Bar is.

See http://calbarjournal.com/August2013/TopHeadlines/TH3.aspx

Furthermore, the State Bar is wasting money auditing thousands of its members—to ensure compliance with the requirements—which is absurd, abusive, and another reason why the trade association should be abolished.

See http://calbarjournal.com/July2014/TopHeadlines/TH6.aspx (“5,500 attorneys expected to go through MCLE audit”)

Education of California’s lawyers can and does take place on an individual, very personal basis.  Also, there are many private organizations, such as universities, which provide superior educational resources.

[11] For example, the author testified as an expert witness before the State Bar pursuant to its subpoena on June 27, 2012, with respect to matters involving another member of the State Bar.  Section 1986.5 of California’s Code of Civil Procedure states in pertinent part:

Any person who is subpoenaed and required to give a deposition shall be entitled to receive the same witness fees and mileage as if the subpoena required him or her to attend and testify before a court in which the action or proceeding is pending.

See http://codes.lp.findlaw.com/cacode/CCP/3/4/3/2/s1986.5

The State Bar has not paid the author, and one must assume that it has not paid others as well.  In its defense, on September 12, 2013, it produced a handwritten “Clarification order,” dated July 9, 2012, for the first time—which had been signed by State Bar Court Judge Armendariz, and purported to shift the fees and costs away from the State Bar.  However, it did not override or nullify the California statute; and arguably the State Bar Court judge is “complicit” in the State Bar’s lawlessness.

How many people have been “cheated” financially by the State Bar?  Indeed, it must be determined—by means of an independent investigation—how many other times the State Bar has used the State Bar Court or other ruses to cheat people out of monies that are owed.  The spotlight must be focused on the State Bar’s employees and State Bar Court judges who engage in such abuses.

Clearly, the State Bar is dodging the courts and the laws by turning to its own State Bar Court judges to bless its decisions.  The State Bar’s rules and those of the State Bar Court are Byzantine at best, and are skewed against lawyers in California.  See, e.g., rules.calbar.ca.gov and www.statebarcourt.ca.gov/ProceduresProgramsandRules.aspx (“Rules of Practice and the Rules of Procedure, which govern State Bar Court proceedings”)

Next, a “Senior Trial Counsel” with the State Bar, Joyce, told the author that the “black letter law” decisions of federal courts (including the U.S. Supreme Court, and the U.S. Court of Appeals for the Ninth Circuit) do not count as far as she was concerned, nor do decisions of California’s Supreme Court.

In essence, she was saying that the “law of the land” could and should be ignored.  Needless to say, the author was stunned and flabbergasted by her ignorance and naïveté, yet these are the types of lawyers who are apparently employed by and represent the State Bar.  They are lawless; and hence, when the State Bar acts through them, it is lawless.

Evidently the performances of the State Bar’s prosecutors are measured by how many “scalps” they take, which gives them enormous incentives to go after the State Bar’s members, whether they are innocent or not—and grotesquely distorts the prosecutorial process.  When State Bar Court judges override existing laws, without thinking twice about it, one understands how corrupt the system is, from one end to the other.

Most prosecutors seemingly have never laid eyes on an innocent defendant.  As the author has written:

Anyone who thinks that prosecutors are advocates of truth and justice is living in a “Mary Poppins” fantasy world, and knows nothing about how our legal system really operates. It is seldom if ever discussed or written about, yet it is often said—by lawyers—that the only thing separating prosecutors from guilty criminals is the “badge.”

See infra n.6.  Imagine a life spent hurting people.  Joyce may be a perfect example, and the question is: how many people has she hurt?

Unlike some state bar associations such as the District of Columbia Bar, where the membership is worth something, the State Bar is a burden and not something to be proud of.  When it essentially went out of business, it was not missed except by its staff members, who had been feeding at its trough.

As the author has written in an article cited above:

Can our legal system be fixed, and will the American people come to trust and respect lawyers and judges again, and believe that justice not only exists but prevails in this great nation?  Maybe . . . if the profession is restructured, and if it attracts those people who believe that the law is sacred, sacrosanct and pristine—truly a shining city upon a hill—and they put such principles into practice.  The profession does not require saints, but it does need something different than “Law West of the Pecos by Judge Roy Bean.”  And it needs people who are different than it has been attracting: who are often driven, ruthless, unprincipled, money-hungry, and power-hungry.

See infra n.7 (emphasis in original).  At the very least, Joyce seems to be Bean’s successor.

On July 29, 2014, Joyce commenced a disciplinary action against the author based on (1) “Failure to Update Membership Address,” and (2) “Unconscionable Fee” and “Failure To Refund Unearned Attorney Fees.”  The charges were totally false, bogus and constituted pure harassment—and this article was written well beforehand (see infra n.2)—but she brought the action anyway.  And Miller did nothing to stop her, even though both were briefed fully about the issues.  See, e.g., infra n.4.  It is unrealistic to expect even a modicum of justice from a rogue prosecutor such as Joyce, or a judge like Armendariz to whom the author’s case was assigned,  who ignores the law.

It is interesting that on the same date, July 29, 2014, the homepage of the State Bar’s Web site asked in a banner headline: “What can the State Bar of California do for you?”  Above that question in bold print appeared another headline: “MCLE audit will include more than 5,500 [members].”  See infra n.10. Below the question appeared another headline: “State Bar Court recommends three-year suspension for prominent ex-prosecutor.”  This is the State Bar today: hurting its members in every way possible, to justify its bloated budget and staff.

The author has maintained and paid for the same Post Office address continuously since 1989, but some mail was returned to the State Bar through no fault of his own.  Also, the author and a legal team that he assembled lost a class-action, RICO Internet fraud case against the national infomercial company, Guthy-Renker, despite the fact that its agent in Texas testified as to the full extent of the fraudulent scheme that hurt large numbers of Americans.  Other attorneys (including one who is a federal judge today), law clerks and the author worked hard to win the lawsuit; however, “success has many fathers, while defeat is an orphan.”

There is no way to predict with certainty how a federal judge will act: lawyers are not fortune tellers or seers.  A new District Judge decided against the author’s clients, just as the judge decided against a major Hollywood movie studio where a friend of the author is Executive Vice President and General Counsel.  Hence, the former clients came after the author—even though no lawyer can guarantee success, and the author made that clear to them—and Joyce was only too happy to oblige.

Imagine every lawyer in California being harassed by the State Bar when he or she loses a lawsuit, which is Joyce’s modus operandi and constitutes nothing more than a witch hunt.  The author ceased to represent the former clients more than ten years ago. Hence, the case is time-barred by “Rule 5.21 Limitations Period” of the Rules of Procedure of the State Bar of California, which states in pertinent part: “[T]he proceeding must begin within five years from the date of the violation.”  The case was baseless for other reasons as well.  However, this did not matter to Miller or Joyce, or deter them.

The tragedy is that Californians and other Americans were defrauded by Guthy-Renker, yet the federal judge did not care; and certainly, neither Miller nor Joyce care, even though Guthy-Renker conducted its fraudulent scheme from and in California.  Just as the State Bar does not take action against Countrywide’s lawyers—or against (1) attorneys who prey sexually on their vulnerable clients in divorce proceedings, or (2) Michaelson who is reportedly subject to criminal prosecution for fraud, or (3) Lubetzky who suborned perjury with respect to testimony before the State Bar, which is a crime—so too it looks the other way regarding Guthy-Renker and its lawyers.

[12]  Lots of Californians and Americans are hurting these days, including lawyers.  See https://naegeleblog.wordpress.com/2012/02/07/poverty-in-america/ (“Poverty In America”) (see also the comments beneath the article).  California has severe financial problems.  However, the State Bar continues to spend like a “drunken sailor,” which is unfathomable and reprehensible.

[13] Also, it is not beyond the pale of reason to believe that boycotts of the State Bar and its activities by members may occur; mass refusals by them to pay State Bar dues may take place; and California lawyers may refuse to satisfy the State Bar’s CLE requirements.





Is Financial Reform Simply Washington’s Latest Boondoggle?

23 04 2010

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


[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





Ronald Reagan and John F. Kennedy: A Question of Character

20 03 2010

With the passage of time, America’s greatest presidents prior to the 21st Century are apt to be viewed as Washington, Jefferson, Lincoln, Franklin Roosevelt and Ronald Reagan.  Gone from that list most certainly will be John F. Kennedy. Today, few young Americans even know who he was—or care about him—because less than a handful of his positive accomplishments had any lasting significance.

Reagan will be remembered, while Kennedy may be forgotten. This conclusion will surely offend those Kennedy disciples who are still pushing the myth of Camelot until its last gasp. Like William McKinley, the fact that an assassin cut short Kennedy’s life and presidency might be all that Americans recall about him 50 years from now.

It is striking how the death of Reagan . . . made one realize how great he was, and how small and inconsequential Kennedy’s accomplishments were. Aside from some flowery words—mostly written for him by Theodore Sorenson—and what remains of the once-vibrant Peace Corps, Kennedy’s legacy is almost nonexistent today.

Reagan was lucky and blessed to have survived an assassin’s bullet only 69 days after he took office on January 20, 1981, and America and the free world are fortunate that he did.  More than 40 years after Kennedy’s death, the full extent of his life-long medical problems is still being withheld from the American people and conservative scholars; and it is doubtful whether he would have lived to accomplish anything approaching what Reagan achieved.

Kennedy launched this nation into Vietnam; and his secretary of defense, Robert McNamara, was the architect of that lost war and the enormous suffering that it produced.  More than 50,000 brave Americans died, and it impaled this nation’s honor on the horns of a tragedy that still haunts policy makers and citizens alike.

Even before Vietnam, Kennedy was responsible for the failed Bay of Pigs invasion of Cuba, where Fidel Castro humiliated him completely. This led to more than 40 years of enslavement for the Cuban people. The Cuban Missile Crisis, or Kennedy’s confrontation with the Soviet Union, might have given rise to a nuclear winter.

Reagan is remembered for having brought down that “Evil Empire,” as well as the Berlin Wall and the Iron Curtain, and for freeing the people of Eastern Europe. Today, America’s friends in “New Europe” are its partners in NATO and its allies in the EU—as free men, woman and children who are no longer enslaved by communism.

Reagan’s marriage to Nancy was special and they were blessed with love. There was no hiding of mistresses by the Secret Service, which took place during Kennedy’s presidency. His reckless affairs with women were only outdone by his irresponsible and dangerous relationships with mobsters such as Chicago crime boss Sam Giancana.

Reagan was a doer who had style. Kennedy had style; however, the bloom has even gone off that rose. His serial womanizing, relations with Mafioso figures like Giancana—through their sexual liaisons with Judith Campbell Exner, who was used as their go-between—and other serious character flaws marred it.

Reagan was elected and reelected by landslides, while it is doubtful whether Kennedy would have become president in 1960 if the Mob had not helped him in Illinois and West Virginia—and Giancana claimed credit for that. Kennedy was the son of a bootlegger, and the apple does not fall far from the tree.

The discrepancy between Camelot and the man himself has been laid bare; and there is a stark difference between the hype of Kennedy acolytes and the truth. Perhaps the debunking of his myth is similar to what happened to this country after Vietnam. Maybe Kennedy and America’s invincibility before that war both shared a similar fate, and this country’s naiveté somehow ended.

Kennedy was not someone to look up to, much less deify. Many of us came to that conclusion reluctantly, years ago, with a sense of sadness rather than anger. Like the potentate in Hans Christian Andersen’s fairy tale, “The Emperor’s New Clothes,” the myth about Kennedy and his feet of clay have become clear for all to see with the passage of time.

In a recent Discovery Channel poll, Reagan was chosen as the “Greatest American,” edging Lincoln by a small margin. When he left office, Reagan had fulfilled his 1980 campaign pledge to restore “the great, confident roar of American progress and growth and optimism.” Also, greatness is often achieved in times of war, and Kennedy never won the war with Cuba, much less the Vietnam War that he started, nor did he win the Cold War—which Reagan won, as he implemented the policy of “peace through strength.”

Reagan will be remembered as one of America’s greatest presidents and a man of character. Kennedy was a tragic Shakespearean figure who may be forgotten and consigned to the dustheap of history. Perhaps this contrast between Reagan and Kennedy—this question of character that Thomas C. Reeves described in his terrific book about Kennedy—is what separates the men and underscores their differences, and ultimately will define their respective places in history.

© 2010, Timothy D. Naegele


[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] This article was published first at MensNewsDaily.com on August 1, 2005.  See http://www.naegele.com/documents/ReaganJFK.pdf





Barack Obama: America’s Second Emperor?

1 01 2010

By Timothy D. Naegele[1]

Just days after announcing the surge of 30,000 more U.S. troops in his Afghan war, Barack Obama was in Oslo to accept the Nobel Peace Prize that was announced shortly after he became president—before he had done anything.  Next, he was in Copenhagen accepting a deal without any teeth to address “global warming,” in the midst of a blizzard that dumped snow on the Danish capital, suggesting to most people that the issue is a “hoax.”

Straddling his back-to-back trips to Europe, he was in Washington, D.C.—where he was met by a blizzard on his return from Denmark—pushing for the enactment of ObamaCare that Americans oppose[2].  The legislation is so reckless that it had to be rammed through the U.S. Senate on a partisan vote.  Also, the Democrats’ leadership hid the exact nature of the health care bill from senators, who surely had a right to know what they were voting for.

Then the president jetted off to spend the holidays in Hawaii[3], having irresponsibly saddled the people with ObamaCare—after the legislation clears a joint Senate-House conference committee and he signs some version of it into law—which is reprehensible, certainly with respect to its impact on Medicare patients[4].  His recent travels alone create a carbon footprint globally that boggles the mind, especially when so many Americans are suffering from an economic meltdown that shows few real signs of abating.  Indeed, 49 States have lost jobs since his so-called “Stimulus Package” was enacted.[5]

His popularity poll numbers have been plummeting[6], but he is seemingly oblivious to the will of the people and determined to remake the United States and the world in his own image.  Never mind that his life was shaped by years growing up in Hawaii and Indonesia, he is bent on changing this country.  He did not set foot on the American mainland until he attended Occidental College in Los Angeles and Columbia University in New York City; and when he did so, he was a druggie—according to his own admissions[7].

He ignores a super-majority of Americans who believe warming and cooling are natural phenomena that have occurred in cycles on this planet for millions of years.  Science and common sense tell us that some of the coldest temperatures recorded to date have occurred in recent years.[8] Yet, in remarks prepared for delivery in Denmark, he called on heads of state and other attendees to forge a deal, warning that “[u]nchecked, climate change will pose unacceptable risks to our security, our economies, and our planet.  This much we know.”[9]

What we know for certain is that scientific studies support the opposite conclusion, namely that “global warming” is a hoax; and they have been suppressed and their authors have been intimidated.  Also, the leaders who arrived in Copenhagen did so on private jets, and they commandeered a fleet of limousines in the midst of global economic problems—as if to thumb their noses at “commoners” worldwide who pay for their trips and lavish life styles, and say: “Let them eat cake.”

Obama is determined to close our detention center at Guantanamo Bay, Cuba, and transfer its “detainees” (or jihadists) to prisons in the continental U.S., which the American people oppose.  Also, he pushes for the trial of terrorist mastermind Khalid Sheikh Mohammed in New York City—rather than in a military tribunal—which will make a public spectacle of the event, and expose the city to more chaos and the risk of additional attacks at a time when it is still traumatized by 9/11.

His decisions on both issues are wrong and irresponsible, which was underscored by the attempted Christmas Day terrorist bombing attempt on Northwest Airlines Flight 253.[10] Earlier in the year, the president had the audacity to give himself a “B+” for his performance in office.  However, it is doubtful that a majority of Americans would give him a grade even remotely approaching that.  In fact, he has been given an “F” for protecting Americans, and criticized harshly.[11]

Obama is pursuing his war in Afghanistan, but failing to heed the advice of his generals and trying to micromanage the war on the cheap, thereby endangering the mission as well as brave members of our military—which is stretched too thin already.  They do not deserve to be hamstrung into failure by an anti-war community organizer-president, who is half-heartedly supporting the war and unable (or unwilling) to state that the goal of winning is why we are there.[12]

He is pursuing deals with Russia’s “dictator-for-life” Putin, who is a smoother version of Stalin.  Both men are known for the brutal oppression and systematic elimination of their critics.[13] Russia is no longer a super power, and it is little more than a Third World country with severe economic problems.  It should not be helped by the United States, much less coddled; and Putin should be treated as our enemy[14]. Obama has befriended Venezuela’s Chavez too, and other tinhorn dictators and enemies of America.

In 1859, Joshua Abraham Norton—better known as “Emperor Norton I,” a celebrated citizen of San Francisco—proclaimed himself “Emperor of these United States.”  He issued numerous proclamations including his “order” that the U.S. Congress be dissolved by force.[15] If there was ever an American who had regal notions of grandeur and an imperial presidency, it is Barack Obama.  His naïveté[16] has been matched by his arrogance and overarching narcissism.  Ultimately, he may be viewed as a tragic Shakespearean figure who is forgotten and consigned to the dustheap of history.

In a famous Danish fairy tale by Hans Christian Andersen, an emperor marches in a procession under a beautiful canopy wearing a new suit of clothes that does not exist, provided by two swindlers. A little child says at last: “But he has nothing on at all.”[17] Obama’s core beliefs and modus operandi are becoming clear for Americans and the world to see[18], as the first decade of the 21st Century ends ominously.  He is a mistake of potentially cataclysmic proportions.[19]

© 2010, Timothy D. Naegele


[1] Timothy D. Naegele was counsel to the U.S. Senate Banking Committee, and chief of staff to Presidential Medal of Freedom 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.rasmussenreports.com/public_content/politics/current_events/healthcare/december_2009/voter_attitudes_towards_health_care_plan_harden_58_opposed (December 30, 2009: “(“Thirty-nine percent (39%) of voters nationwide support the plan, and 58% are opposed.  That’s consistent with our weekly tracking of the issue which has found support between 38% and 41% every week from just before Thanksgiving to the end of 2009.  The new figures include 19% who Strongly Favor the plan and 46% who Strongly Oppose it.”)

[3] See, e.g., http://www.honoluluadvertiser.com/article/20091224/NEWS01/912240345/Timing++of+Obama+s+family+vacation+in+Hawaii+is++perfect+

[4] See, e.g., http://www.bloomberg.com/apps/news?pid=20601087&sid=aHoYSI84VdL0

[5] See, e.g., http://republicans.waysandmeans.house.gov/News/DocumentSingle.aspx?DocumentID=164206

[6] See, e.g., http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

[7] See Barack Obama, “Dreams from My Father” (paperback “Revised Edition,” published by Three Rivers Press, 2004), p. 93 (“Junkie.  Pothead.  That’s where I’d been headed: the final, fatal role of the young would-be black man.”); see also pp. 120, 270; https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/.

[8] See, e.g., http://www.guardian.co.uk/world/2009/dec/22/cold-weather-europe-death-toll; http://www.chron.com/disp/story.mpl/ap/nation/6787095.html (“[T]he Dallas-Fort Worth area was experiencing its first White Christmas in more than 80 years”); http://www.weather.com/newscenter/stormwatch (“Historic snowstorm enters the record book”); http://www.dailymail.co.uk/news/worldnews/article-1248956/Snowmageddon-brings-chaos-U-S-East-Coast-Washington-DC-braces-worst-blizzard-90-years.html (“[‘Snowmageddon’ brings] the heaviest snowfall in [Washington, D.C.] for 90 years”)

[9] See, e.g., http://blogs.wsj.com/washwire/2009/12/18/text-of-obamas-remarks-in-copenhagen (“All of you would not be here unless you, like me, were convinced that this danger is real.  This is not fiction, this is science. Unchecked, climate change will pose unacceptable risks to our security, our economies, and our planet.  This much we know.”)

[10] See, e.g., http://online.wsj.com/article/SB126209221278008901.html?mod=WSJ_hps_MIDDLESecondNews AND http://online.wsj.com/article/SB10001424052748703278604574624503147162222.html (“Sending Gitmo’s jihadists back to this [Yemeni] maelstrom makes no security sense”)

[11] See, e.g., http://blogs.telegraph.co.uk/news/tobyharnden/100020934/barack-obama-gets-an-f-for-protecting-americans AND http://www.washingtonpost.com/wp-dyn/content/article/2009/12/31/AR2009123101744.html (“The reason the country is uneasy about the Obama administration’s response to this attack is a distinct sense of not just incompetence but incomprehension”)

[12] See, e.g., http://www.washingtonpost.com/wp-dyn/content/article/2009/12/25/AR2009122501923_pf.html (“Terms such as ‘winning’ and ‘victory’ have been eschewed by the White House.  Obama did not use either in his Dec. 1 address, and he said in an interview earlier this year that he was uncomfortable using the term ‘victory’ when fighting ‘a non-state actor, a shadowy operation like al-Qaeda.’”).

[13] See, e.g., http://www.theotherrussia.org/

[14] See, e.g., http://www.cbsnews.com/stories/2009/12/29/ap/world/main6032803.shtml

[15] See, e.g., http://en.wikipedia.org/wiki/Emperor_Norton

[16] See, e.g., http://dyn.politico.com/printstory.cfm?uuid=DEE3CCB3-18FE-70B2-A8EADFBA65A39259

[17] See, e.g., http://en.wikisource.org/wiki/The_Emperor%27s_New_Clothes

[18] See, e.g., Barack Obama, “Dreams from My Father” (paperback “Revised Edition,” published by Three Rivers Press, 2004).  See also https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist

[19] See, e.g., http://online.wsj.com/article/SB10001424052748704152804574628134281062714.html?mod=WSJ_hp_mostpop_read (“[The] patina of cosmopolitanism in President Obama’s background concealed the isolationism of the liberal coalition that brought him to power.  . . . The man who demolished the Iraqi tyranny, George. W. Bush, is no longer in power, and a different sentiment drives America’s conduct abroad.  . . . No despot fears Mr. Obama, and no blogger in Cairo or Damascus or Tehran, no demonstrator in those cruel Iranian streets, expects Mr. Obama to ride to the rescue.  . . . He had declared a unilateral end to the ‘war on terror,’ but the jihadists and their mentors are yet to call their war to a halt.  From Yemen to Fort Hood and Detroit, the terror continues.”)