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.”)