Posted On: December 24, 2008

Bailout and Secrecy a Toxic Combination

Secrecy in government is a bad thing. Secrecy in corporations getting huge government bailout checks is just as bad, if not worse.

As we all know, Congress passed a $700 billion bailout bill this past fall, and the Treasury Department immediately doled out multi-billion-dollar "rescue" packages to huge banks and corporations like the Bank of America and AIG which told people things like they wouldn't be able to loan anyone money without a rescue or that they were too big to fail. Thus far, there seems to be precious little to show for the money, as banks are apparently still reluctant to lend money. Cynics might say the banks just, in the words of Woody Allen, took the money and ran.

So the Associated Press contacted 21 banks which received at least $1 billion in government money and asked four questions: How much has been spent? What was it being spent on? How much is being held in savings? And what's the plan for the rest?

AP's request was met with what one might call radio silence. None of the banks provided specific answers, and most even refused to explain why they are keeping the information secret.

If the government had done this, there would have been hell to pay and people could agitate with their elected representatives or maybe vote them out of office. People could make Freedom of Information Act requests. But there's no real way to hold corporations accountable: even shareholders have no real voice in corporate governance.

House Speaker Nancy Pelosi is quoted as saying, "It is outrageous that those institutions cannot -- or will not -- provide information on how they are spending billions of taxpayer dollars."

Congress should turn off the spigot of taxpayer dollars to corporations which won't explain what they are doing with the money. Congress should probably turn off the spigot to these corporations period. The patriots who fought for our freedoms abhorred taxation without representation. We certainly aren't being represented in the boardrooms of the corporations getting bailout money.

Posted On: December 22, 2008

The First Amendment and your vanishing portfolio

What do the First Amendment and your vanishing stock portfolio have in common?

The answer is the need for openness, transparency and watchdogs on powerful institutions. The people who created the First Amendment more than two centuries ago had never heard of hedge funds, but they knew that too much power and wealth concentrated in too few hands would create a huge problem. Sadly, that lesson got lost in the financial markets as greedy hedge funds and investment banks piled up money in opaque investments and a complicit administration ignored the warning signs of financial disaster created by things like the subprime mortgage crisis. Because little information about many investments such as hedge funds is publicly available, neither the press nor public were able to ferret out information and help the government do its job of keeping businesses honest.

Now, a watchdog press is pointing out that there were plenty of warning signs, but the problem was hidden too long by powerful financial institutions and an administration which got enough support from those financiers to make it all too willing to look the other way. We're finding out now -- after stock indexes have dropped 40 percent -- what happened to us. As President-elect Barack Obama said today, agencies like the Securities and Exchange Commission were "asleep at the switch" while people like Bernard Madoff apparently made off with billions of dollars.

What all this means is that transparency, a watchdog press and blogosphere, and an informed citizenry are necessary to protect our rights -- and our pocketbooks -- from those who would take them away.

Posted On: December 18, 2008

Tourist Libel -- UK Libel Laws Threaten U.S. Free Speech?

The people who fought the Revolutionary War didn't have much use for the British.

One thing that differentiates us from the British is the history of robust, uninhibited speech in the United States, protected by the First Amendment, which limits libel laws and makes people much freer to speak and publish here than across the pond.

Some celebrities and other targets of critical speech in an era of instant worldwide access to free speech have figured this out. They've sued for libel in Great Britain, which offers fewer free speech protections, then tried to bring overseas judgments to the United States and enforce them against American citizens and countries.

Now, Congress and some states are considering legislation to protect American citizens from overseas libel judgments which don't comply with American law. That's a good thing. As one member of the British Parliament said, "The practice of libel tourism -- the willingness of British courts to allow wealthy foreigners who do not live here to attack publications that have no connection with Britain -- is now an international scandal." Americans should do what they can to stop it.