Yesterday, I offered my two cents on a particular Director, Rahm Emanuel, who served on the Board at Freddie Mac for a year in between a stint at the White House and running for Congress. I appreciate the discussion; I’m still relatively new, so it’s nice when there is feedback, when something strikes a chord.
Today, I am following up with a broader brushstroke, a general declaration for corporate governance in the financial industry.
I’ll start with a little follow up from yesterday, because I want to explicitly state that while yesterday was talking specifically about one individual Board Member who is representative of a systemic problem, today is about addressing that problem on a systemic level. As I said
Assuming Emanuel wasn’t a key instigator of the questionable practices, was he incompetent or negligent?
And more importantly for our political purposes, is that question worth investigating?
I disagreed yesterday with the particular letter that Hamsher wrote with Norquist, and I still disagree today. I’m not claiming that I have a criminal indictment against Rahm Emanuel. Rather, I’m asking if his conduct as a Director is relevant at all? Do we care whether the Chief of Staff to the President of the United States is incompetent, or negligent, or irresponsible, or indifferent, or honestly got fooled by the shenanigans by Freddie’s executives, even when those questionable practices included criminal lawbreaking and billions of dollars? After all, not all of those explanations can be true. Do we sweep those kinds of questions under the rug, or do we deal with them? That, I think, is a political question, not a legal question. Responsibility and leadership are much broader concepts than their rather limited legal connotations.

Indeed, most corporate crime these days doesn’t even involve an admission of wrongdoing. Massive crimes, involving even billions of dollars, can magically result in a fine where no one admits fault to anything. It’s brilliant for its complete lack of transparency and accountability. Brilliant, at least, for those responsible who largely get off the hook. These things are simply written off as a cost of doing business.
And of course, there are even bigger crimes we’re not investigating at all. Not to sound like a broken record, but when we don’t even instigate legal proceedings for fundamental constitutional violations, let’s get real, we’re not going after white collar corporate criminals. We make public enemies of specific people from time to time, like Martha Stewart or Bernie Madoff in the financial realm, or England and Karpinski with regard to detainee treatment, and then tell everyone to Move On, Show’s Over, Nothing to See Here, it was just A Few Bad Apples.
Heaven forbid we call out a specific individual; that’s unfair, they couldn’t have done anything, the problem is the system. Emanuel was just a Board member for one year, what could he have done? Gosh darn it, the criminals, the executives at Freddie, were hiding information from him and trying to trick him and confuse him. You can’t possibly expect Board Members in such a situation to do anything!
Well, I can. That’s what makes my position radical change. I believe corporate governance has to change, and in a big way. It starts with not accepting the status quo, which says that nothing can be done. The future is what we make of it; it is not set in stone, it is not inalterable. And Emanuel is a great personification of this. There are corporate executives to this day that are trying to trick the Administration, that are trying to hide information from the Administration, that are hoping the Administration will look the other way and not ask questions. That’s what makes Emanuel’s Board tenure at Freddie Mac so scarily relevant, from my perspective. His indifference to corporate wrongdoing then doesn’t seem to be an anomaly. It seems to mesh very well with career opportunism that has made him a fortune of wealth and political power.
But, let’s move past Emanuel from here on out. Indifference to corporate wrongdoing, disinterest in effective corporate governance, is a systemic issue, particularly in the financial world. In fact, I’m going to make a statement that is perhaps even more controversial than anything said so far.
Many Board Members of large corporations, the people responsible for the governance of an organization, have no idea what their organizations are doing.
It’s a crisis. And like our wage crisis, our environmental crisis, our healthcare crisis, our prison crisis, corporate (mis)governance is not a crisis of sudden urgency. It’s a slow-motion crisis, something that has developed over years and years. It’s not the fault of any one person or event, but rather, the aggregate sum of many actors and many events. At a certain level, assigning responsibility is difficult. Is it fair to single out one person when ‘everybody’s doing it’? Well, do we arrest drug users collectively, or do we arrest individual people for individual acts? Is it fair to demand a higher standard of conduct? Well, is it fair that attractive people make more money? Life ain’t fair. And when it comes to individuals who are paid to serve on corporate boards, well, they’re generally the folks who have the least room to complain about the unfairness of life.
The aggregate consequence of absolving everyone of responsibility is that no one is accountable for anything, either preventing bad behavior from occurring or correcting bad behavior once it happens.
There is one specific compromise step which I will advocate today which will help us delineate between Directors who are personally responsible for corporate failures and those who just were too indifferent or uninterested to know any better. You see, at many nonprofit organizations, Board Members (Directors/Trustees/Council Members/etc) are volunteers. Churches, social service agencies, schools, and so forth frequently attract people by appealing to a sense of community involvement, of service. There is much debate in the nonprofit world about the role of compensation generally, and compensation of Boards in particular. But some nonprofit organizations and for profit organizations pay Board Members. This usually comes in the form of stock and cash compensation.
Here’s my proposal. Let’s declare 2010 a year of corporate governance amnesty. It will be a year when Directors can come clean, acknowledge their responsibility for not understanding the business in exchange for protection from ramifications from legal connotations of things like negligence related to the admission. There are two criteria for this.
1. There must be a specific, written document outlining the areas of weak or incomplete understanding, and
2. There must be a personal check written to the US Treasury equal to the total amount of compensation the individual was paid by the organization for serving in the capacity of a Board Member.
This is important because fixing our systemic failure of corporate governance is more important than holding grudges against individual actors in the system. What this does is it puts people on record as affirming whether they ‘earned’ their compensation or not. There may be social ramifications for someone to come forward, but there will not be legal ramifications.
Then, that allows us to focus our energy on those who do not return the money. You see, those people, the ones who pocketed some money and went on their way, are precisely the folks who’ve been rummaging through the US Treasury piggy bank these past couple years. Before one dime of taxpayer money is spent, corporate leaders should show actual leadership and take responsibility for their own mismanagement. One way they can do that is contributing financially to the bailouts.
In short, those responsible for governing corporations can’t have it both ways. They either have a responsibility due to their compensation, or they should absolve themselves of responsibility by donating their compensation to the US Treasury that has donated so much money to the very companies they mismanaged into the ground. If non-executive Board Members aren’t responsible for anything, then their compensation is tantamount to theft. But like everything else, theft is in the eye of the beholder.
My year of amnesty is one step, not a comprehensive solution. As long as Board Members can receive financial compensation for not doing anything, none of the more drastic steps for revamping corporate governance are remotely achievable. It’s a profitable system for the actors involved, and nobody wants to rock the boat.
Crossposted at Daily Kos.

my comment

tonyryals December 30th, 2009 at 6:06 pm 3
And it’s even worse than you state.My theory is that most of the money placed in shares of Fannie Mae,Freddie Mac and probably all shres named ex corrupt ex SEC Chairman Christopher ‘Naked Shorts’ Cox on the sec.gov website in 2008(including Goldman Sachs!),were NOT ‘naked shorted’ at all.
This was a term first made up or erroneously popularized by Steve Forbes’ National Taxpayers Union founder James Dale Davidson who still runs penny stock scams out of the NTU office a few blocks from the main Securities Exchange Commission office in Alexandria,Virginia.He is an untouchable and protected for some reason by both Republicans and Democrats.
He founded Agora Inc penny stock Holding(and dumping) ‘company’ of Baltimore for his penny stock money laundering ops and used LOM or Lines Overseas Management of Bermuda to pump and dump Genemax with its supposed cancer vacine and probably Endovasc,etc., then craeted NAANSS or National Association Against Naked Short Selling in 2002 and claimed they were ‘naked shorted’.
So how strange years later that the collapse of Rahm Emanuel’s Freddie Mac and Barney Frank’s boyfriend Herb Moses’ Fannie Mae would be officially ascribed to naked short selling’ a term made up to distract from illegal pumps ands dumps of penny stocks.Only thing is that Freddie Mac and Fannie Mae like a Lanny Davis connected ponzi scam called Novastar Financial all paid dividends and the criminals like ex SEC Chair Chris Cox who claimed-lied that they were victims of ‘naked short sellling’ can’t answer the question of why if counterfeit shares were being dumped then why did no one complain of not receiving their dividends !
Rahm Emanuel and BARNEY FRANK SHOULD BE CALLED TO DEFEND OR REFUTE THE LIE THAT FANNIE MAE AND FREDDDIE MAC SHARES WERE ‘NAKED SHORTED’ OR COUNTERFEITED.Our own government is the enemy and even Senators Carl Levin,Arlen ‘Magic Bullet’ Spector Chuck Grassley,Bob Bennett,Orin HATCH and Jon Testor have promoted this fraudulent rumor so they are covering up for Emanual and Frank and the biggest heist of American investors’ money into offshore accounts in world history.LOM of Bermuda and Leumi Bank of Israel and many more anonymous accounts inclusding in Switzerland and Caymans held Fannie Mae and Freddie Mac when they were methodically dumped – then the SEC and Chris ‘Naked Shorts’ COX PLACED THE LIE ON THEIR WEBSITE(WHERE IT REMAINS)THAT FREDDIE MAC FANNIE MAE BANK AMERICA LEHMAN GOLDMAN SACHS,ETC,ETC., WERE ALL VICTIMS OF ‘NAKED SHORT SELLING’ ! Case closed.
The SEC ands its ‘special council’ STEVEN G JOHNSTON BY THE WAY WON’T PROVIDE ME WITH ANY PROOF THAT THEY AREN’T LIEING AND TELLS ME I’D HAVE TO GET THE SEC’S AND CHRIS COX ‘PROOF’ OF ‘NAKED SHORT SELLING’ BY APPLYING UNDER THE FREEDOM OF INFORMATION ACT OR FOIA.Ionly wish there were real investigative reporters and someone would take them up on their offer.I know they would only give me the run around as they have for years.
http://www.sec.gov/news/press/2008/2008-143.htm
SEC Enhances Investor Protections Against Naked Short Selling
FOR IMMEDIATE RELEASE
2008-143
Washington, D.C., July 15, 2008 – The Securities and Exchange Commission today issued an emergency order to enhance investor protections against “naked” short selling in the securities of Fannie Mae, Freddie Mac, and primary dealers at commercial and investment banks….
The securities identified in the Commission’s order:
Company Ticker Symbol(s)
BNP Paribas Securities Corp. BNPQF or BNPQY
Bank of America Corporation BAC
Barclays PLC BCS
Citigroup Inc. C
Credit Suisse Group CS
Daiwa Securities Group Inc. DSECY
Deutsche Bank Group AG DB
Allianz SE AZ
Goldman, Sachs Group Inc GS
Royal Bank ADS RBS
HSBC Holdings PLC ADS HBC and HSI
J. P. Morgan Chase & Co. JPM
Lehman Brothers Holdings Inc. LEH
Merrill Lynch & Co., Inc. MER
Mizuho Financial Group, Inc. MFG
Morgan Stanley MS
UBS AG UBS
Freddie Mac FRE
Fannie Mae FNM
http://www.sec.gov/news/press/2008/2008-143.htm
Yeah,sure.
“The SEC’s mission to protect investors, maintain orderly markets, and promote capital formation is more important now than it has ever been,” said SEC Chairman Christopher Cox. “Today’s Commission action aims to stop unlawful manipulation through ‘naked’ short selling that threatens the stability of financial institutions. We will continue our vigorous commitment to investors by working within the SEC and in close cooperation with our regulatory counterparts to promote the continued health and vibrancy of our markets.”


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http://www.whatdoesitmean.com/index1249.htm

Reports Massive $18 Trillion Theft Of US Funds By Israeli Backed Network

  July 9, 2009

 A stunning FSB report circulating in the Kremlin today states that the largest theft in World history has been engineered by the Israel Security Agency (ISA) under the direction of current Israeli Prime Minister Benjamin Netanyahu, Australian media oligarch Rupert Murdoch and the US investment bank giant Goldman Sachs that has stolen from American mutual and pension fund account holders over $18 Trillion through a device known as “the Doomsday box”.

According to these reports, Israeli opposition leader, and former Mossad agent, Tzipi Livni [photo 2nd left next to Netanyahu] has turned over to the Obama administration the “complete dossier” of the ISA’s crimes against the American government and people after having the leadership of Israel “stolen” from her by Netanyahu, who through the ISA’s use of intimidation and massive bribes forced upon the Israelis the most right-wing government they have ever known.
These reports have come to light since last weeks arrest of a Mossad agent named Sergey Aleynikov by the United States, who these reports say stole from Goldman Sachs the most “complex and secretive stock manipulating programme ever created” and turned it over to Livni, and who in turn then gave copies of it to Russia, China and Germany.
Western news reports on the arrest of Aleynikov state that upon learning of the theft of their “Doomsday Programme”, Goldman Sacks ordered the US Government to arrest him, but as noted by the Bloomberg News Service, “what was Goldman doing with this programme to begin with”?
“Never let it be said that the Justice Department can’t move quickly when it gets a hot tip about an alleged crime at a Wall Street bank. It does help, though, if the party doing the complaining is the bank itself, and not merely an aggrieved customer.
Another plus is if the bank tells the feds the security of the U.S. financial markets is at stake. This brings us to the strange tale of Goldman Sachs Group Inc. and Sergey Aleynikov.
Aleynikov, 39, is the former Goldman computer programmer who was arrested on theft charges July 3 as he stepped off a flight at Liberty International Airport in Newark, New Jersey. That was two days after Goldman told the government he had stolen its secret, rapid-fire, stock- and commodities-trading software in early June during his last week as a Goldman employee. Prosecutors say Aleynikov uploaded the program code to an unidentified Web site server in Germany.
It wasn’t just Goldman that faced imminent harm if Aleynikov were to be released, Assistant U.S. Attorney Joseph Facciponti told a federal magistrate judge at his July 4 bail hearing in New York. The 34-year-old prosecutor also dropped this bombshell: “The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”
How could somebody do this? The precise answer isn’t obvious -- we’re talking about a black-box trading system here.”
To the power that the ISA led Goldman Sachs bank has had over the US in allowing them to steal nearly the entire wealth of that Nation has been devastatingly detailed by the Rolling Stone Magazine News Service in their report titled “The Great American Bubble: How Goldman Sachs Has Engineered Every Major Market Manipulation Since The Great Depression”.
Even worse for the witless American people is that their new President Barak Obama has so filled his administration with former Goldman Sachs executives and lobbyists that Russian economists are now calling Wall Street the “Fourth Branch Of The US Government”, and which includes their current Treasury Secretary, his Chief of Staff, the former Treasury Secretary under President Bush (who engineered the $700 Billion bailout of US banks), and the former Treasury Secretary under President Clinton (who allowed the deregulation of US banks allowing them to loot the American public of their wealth in the first place).
Most important to note in this report are the details describing how Goldman Sachs “Doomsday Programme” was “created” by ISA programmers working under the Chairman of the Israeli National Security Council, Dr. Uzi Arad, his wife, Dr. Ruth Arad, Vice President and Chief Risk Officer of Bank Leumi, and Jacob Ezra Merkin, who bought the Bank Leumi from the Israeli government headed by then Prime Minister Ariel Sharon and finance minister Ehud Olmert, who became Israel’s Prime Minister after Sharon but was forced to step down while under corruption charges allowing Netanyahu to steal the Premiership from Livni.
Now, what is really interesting in these reports is that Jacob Ezra Merkin allowed his longtime business partner Bernard Madoff the “personal use” of the “Doomsday Programme” which he then used to enrich himself, Dr. Arad and his wife, and Madoff to the tune of over $65 Billion they stole largely from the wealthiest Jewish Families in America, and who they knew would not testify against ISA agents in any US Court.
However, the outcry over the billions lost by America’s richest Jewish families necessitated the scapegoating of Madoff, who received a sentence of 150 years in exchange for the US not prosecuting Dr. Arad, his wife or Merkin, all who remain free and uncharged for their crimes. More astoundingly, Dr. Arad, who was banned from ever entering the United States due to the massive Israeli spy network he headed in that country, was granted a visa by Obama who sided with his Goldman Sachs allies against his own intelligence services.  
Also interesting to note in these reports is the role played in the vast Israeli criminal network by the Australian media oligarch Rupert Murdoch, who these reports say has used his vast media holdings in the United States and Britain to collect personal data on “high government officials” which was then used by Dr. Arad’s ISA network to blackmail these officials against conducting any investigation into the crimes they have committed.
Though the United Kingdom has announced an investigation into Murdoch’s vast ISA spy network set up in their country, there remains no evidence of the United States doing the same. 
To the utterly stupefying theft of the American people of their wealth by these criminals it is only eclipsed by the fact that those elements and forces that robbed these people blind have, literally, come out from the shadows and are now openly running the entire government of the United States.
But to the most incomprehensible fact about these Americans is that as these criminals now operate within their highest corridors of government they could not care less, as instead of seeing the truth of these things they have chosen to keep their attention upon the news reports about a 50-year-old self admitted pedophile rock singer who recently died of a massive self inflicted drug overdose.
Though the word idiot’s comes readily to mind in attempting to describe these Americans, there can be no other word than insane to describe what they’ve really become.
© July 9, 2009 EU and US all rights reserved
[Ed. Note: Western governments and their intelligence services actively campaign against the information found in these reports so as not to alarm their citizens about the many catastrophic Earth changes and events to come, a stance that the Sisters of Sorcha Faal strongly disagrees with in believing that it is every human beings right to know the truth.  Due to our missions conflicts with that of those governments, the responses of their ‘agents’ against us has been a longstanding misinformation/misdirection campaign designed to discredit and which is addressed in the report “Who Is Sorcha Faal?”.]
Translation to Spanish by: Sister Maru Barraza, Mazatlán, Mexico