The Hightower Report
Weasels Undermine Ethics Reform; and Congress Coddles Credit-Rating Finaglers
Weasels Undermine Ethics Reform
The word "weasels" not only describes furry, burrowing rodents but also corporate lobbyists who madly tunnel loopholes through our country's ethics laws.
Take Doheny Global Group, an energy and real estate corporation. Last year, it hosted a weeklong schmooze-fest for potential investors, inviting them to hobnob in Israel with "an elite cadre" of power brokers, specifically including such members of Congress as Rep. Ileana Ros-Lehtinen, a Florida Republican. Participants had to pay $18,500 each to be part of Doheny's dog-and-pony show – but the corporation covered the tab for Congresscritters and their spouses.
Wait. Didn't Congress "reform the system" and make these influence-peddling junkets illegal by prohibiting corporate lobbyists from paying for congressional travel? Well, yes. Lobbyists can no longer pay for the travel, gala parties, and other bennies that lawmakers are given on these junkets – but a loophole allows lobbyists' corporate clients to foot the bill.
Likewise, the Congressional Black Caucus held a conference last year in a Gulf Coast casino. Again, major corporate interests weaseled their way into the gathering; the health care workshop was sponsored by Eli Lily, the session on climate change was funded by electric utilities, and Wal-Mart sponsored a clinic on – get this – skeet shooting!
Since the caucus' events were organized by a lobbyist, the corporations were not allowed to fund them directly. No problem, though – a convenient loophole lets them give money to a nonprofit set up by the caucus, and it pays for the events. Caucus members did have to pay for their travel, but they could buy tickets using campaign funds, including money donated by the corporations.
Not all weasels are in the woods – watch out for them whenever lobbyists and lawmakers team up to "reform" the system.
Congress Coddles Credit-Rating Finaglers
America has the wrong approach for dealing with thieves. Rather than looking backward at their misdeeds and punishing them, we merely need to ask that they not misbehave in the future, then monitor their behavior.
Believe it or not, this is how congressional leaders are addressing the thievery of three little-known gangs. Congress' compassionate approach is not meant for common robbers, of course. No, no – lawmakers are happy to punish them to the hilt. Rather, the kid-glove treatment is reserved for thieves named Moody's Investors Service, Standard & Poor's, and Fitch Ratings – the Big Three credit rating agencies that exist to evaluate the worthiness of corporate-issued bonds, assigning a grade (from triple-A to junk) that helps investors know the risk involved in buying the bonds.
But the Big Three run a rigged game that robs our pension funds and other investors. Moody's, S&P, and Fitch are not independent public regulators but for-profit firms that are paid fat fees by the very corporations whose bonds they rate. Yes, this is an inherent conflict of interest! It allows rating firms to profit by merrily putting smiley-faced grades on lousy bonds, thus deceiving (and robbing) the public. For example, the Big Three gave thumbs-up to the subprime housing bonds that turned out to be worthless, leading to trillions of dollars in losses for the public and crashing our economy.
Yet our soft-on-corporate-crime Congress critters have declared these finaglers too big to jail. Rather than taking the Big Three off the street, Congress is coddling them, meekly freeing them to continue their corrupt, for-hire, monopolistic system of credit-rating flimflammery.
The important financial responsibility of grading corporate bonds should be done by a public entity whose sole loyalty is to the public – not to the corporations whose bonds are being rated.