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Waiting for Dodd
Excerpt from The Wall Street Journal - 2009-01-07; Page A12With the opening of the 111th Congress yesterday, all of Washington is tingling with the allure of a fresh start. Not so fast. We've got some leftover business from the 110th Congress -- namely, Chris Dodd's July 2008 promise to release the details of his sweetheart loans from Countrywide Financial.
The Connecticut Senator got favored treatment from the subprime mortgage purveyor, even as he was a power broker on the Banking Committee that regulates the industry. When the news broke, the Senator first denied that he sought or expected preferential treatment. He later admitted that he knew he was considered a VIP at the firm but claimed he thought it was "more of a courtesy." He also promised the Connecticut press that he'd come clean with the documents and details of the loans. But six months later -- nada, zip, nothing.
The rest of the press corps may have moved on, but we'd still like to know. All the more so because former Countrywide Financial loan officer Robert Feinberg told us last fall that Mr. Dodd knowingly saved thousands of dollars on his refinancing of two properties in 2003 as part of a special program for the influential. Mr. Feinberg also reported that he has internal company documents that prove Mr. Dodd knew he was getting preferential treatment as a friend of Angelo Mozilo, Countrywide's then-CEO, and Mr. Feinberg has offered to provide those documents to investigators.
Just before Mr. Dodd made his promise, Bank of America closed its acquisition of Countrywide and Mr. Dodd has continued to oversee BofA and the rest of the mortgage industry as Chairman of Senate Banking. He will now play a lead role in drafting legislation affecting the very business that gave him preferential treatment, yet he still refuses to release the mortgage documents that would illuminate this treatment. As the Senate Ethics Committee examines this case, Mr. Dodd's office reports that he is cooperating with the investigation and that he still intends to make good on his six-month-old pledge. But nothing in the Senate ethics process prevents Mr. Dodd from coming clean with the public whenever he wishes.
We suspect there's at least one habit of the 110th Congress that won't change in the 111th: The Members think they can get away with anything -- and usually do.
Rubin Should Simply Say He's Sorry and Then Leave
Excerpt from The Wall Street Journal - 2008-12-06; Page A10Please let me understand Robert Rubin clearly ("Rubin, Under Fire, Defends His Role at Citi," page one, Nov. 29). After having a direct role in the most serious financial crisis since the Great Depression and after witnessing the near collapse of Citigroup Inc., Mr. Rubin has the audacity to say, "Nobody was prepared for this." Thank goodness he wasn't a director at Bank of America, Wells Fargo, or J.P. Morgan. They seemed prepared for this.
As a senior counselor, one of Citigroup's highest-profile directors and one of its highest-paid officials, he participated in decisions that allowed Citigroup to ramp up its risk-taking and transfer billions of dollars off its balance sheet. I believe history will find him in the financial scrap heap, along with his colleagues Alan Greenspan and Barney Frank, who coincidentally also had nothing to do with the financial crisis.
Warren B. Meretsky
Fort Lauderdale, Fla.
Mr. Rubin's too little, too late defense of his tenure at Citigroup is lacking in all respects. Hiding behind the banner of not being responsible for line operations doesn't exonerate him from much of the blame of Citigroup's demise. Just what did he do other than pontificate at global meetings and greet and meet? It's time for him to go. As a shareholder, I won't vote for him.
Steven Kaufman
New York
There isn't any justification for "$115 million in pay since 1999" for doing next to nothing but helping run the truck over the cliff.
James Macek
Lakeland, Fla.
Mr. Rubin is uncharacteristically defensive of his time at Citigroup. His use of B-School mumbo-jumbo -- "risk book," "granular knowledge," "inflection point" -- is telling.
His blaming the bank's problems on a consultant's report, operating management, or anybody else except himself, is pathetic.
And his response to his compensation at Citigroup is condescending in the extreme:
"I bet there's not a single year where I couldn't have gone somewhere else and made more."
We're still waiting for a Wall Street executive to simply admit that his or her extremely poor judgment has resulted in significant losses for millions of investors.
Gibbs LaMotte
Devon, Pa.
A Code Green Economy
Excerpt from The Oregonian - 2008-12-06; Page B4Former Homeland Security Tom Ridge was widely ridiculed for color-coding the nation's terror-alert status. The Obama administraiton wants to color-code the economy.
Barack Obama promised during the campaign to create 5 million green jobs in a decade, and they will constitute at least $15 billion a year of his stimulus package. Putting people to work weatherizing homes, building wind farms and constructing a new electrical grid will supposedly save the planet and revive the economy all at once, in a lavish, politically correct free lunch.
Michigan Gov. Jenniffer Granholm explained on PBS's "NewsHour" the economic elixer of wind farms: "You need people to know how to build the turbines. You have to have people install the turbines. And turbines have to be connected to the grids. Those are all jobs that can be created if we make a smart investment right now."
To this point, construction jobs have not been widely viewed sa the future of our economy. They once were dismissed as jobs "Americans won't do." Never mind. The fundamental problem is that biofuels and wind energy are less efficient and more expensive than coal (which provides more than half the nation's electricity) and oil (which powers essentially all of its cars).
Currently, 1.8 millino jobs in the economy relate to oil and gas (half of them at gas stations). Why layer more than double – if the Obama goal can be taken seriously – that number of green jobs on top of already existing jobs dissapear, we will have succeeded only in employing more people in energy than otherwise necessary.
The green jobs enthusiasts are making a classic error illustrated by the 19th-century French economist Frederic Bastiat. When a railroad was under construction from France to Spain, someone in Bordeaux suggested that there be a break in the tracks to boost the town's economy with all the extra work for porters to cart luggage between train, etc. Bastiat pointed out that if breaks in the tracks were such an economic benefit, every town should have one and France should build a "negative railroad" consisting entirely of interruptoins.
Of course, the French economy, benefited much more from a real railroad delivering the efficient and cheap transport of goods. The push for green jobs is about creating a "negative" energy sector.
To make people buy biofuels or wind power, either these energy sources have to be subsidized (draining resources away from more productive uses) or traditoinal sources of energy have to be taxed or regulated, which is what Obama proposes with his cap-and-trade plan on carbon emissions. The latter policy will cost jobs in the traditional energy sector and leave consumers with less to save and spend elsewhere. As Iain Murray of the Competitive Enterprice Institute points out, advocates of green jobs always emphasize the gross rather than the net jobs figures because a more complete picture shows they are ultimately subtracting, not adding.
Creating green jobs ins't a new policy. The government basically invented the American ethonal industry, with subsidies, tax credits and a tariff to protect it from foreign competition. Ethanol still is only two thirds as efficient as gasonline and requires about as much energy to produce as it provides. The government has invested billions of dollars in its own "flex fuel" fleet of cars, but 92 percent of the fuel for the cars is standard gasoline.
Jimmy Carter launched a knid of green jobs program a full three decades ago. He poured $3 billion into Synthetic Fuels Corp. that was an embarrassing bust.
It's always a mistake to believe that government can "create" jobs. It only creats jobs by taking resources from the economy, and therefore destroying jobs out of sight. It should attempt to create a favorable business climate and leave the rest, including the color-coding, to the market.
By RICH LOWRY