The Hightower Report

Onshoring Corporate Accounts

From Enron to Wall Street, a big cause of America's major financial collapses in the past decade has been simple deceit. Finaglers used secret offshore accounts and dummy subsidiaries in the Cayman Islands and elsewhere to avoid regulatory scrutiny and to make investors think the businesses were sounder than they really were.

The good news is that Aetna, AIG, MetLife, and other giants have now moved away from such offshore hideouts. The bad news, however, is that they have not actually moved away from the shady practice of hiding their finances from regulators and investors – they just don't have to do it offshore these days. This is because Vermont, Delaware, South Carolina, Utah, and other states have turned themselves into onshore havens for concealing the finances of insurance corporations.

In these states, insurers can set up special subsidiaries that, intriguingly, are called "captives." This scheme allows the same sort of hide-and-seek financial chicanery that offshore havens provided. For example, when AIG was hemorrhaging losses on some of its mortgage insurance policies recently, it created a captive unit in Vermont, shoveled $7 billion in claims by policy holders into it, and thus – poof! – made AIG's ugly books look handsome, allowing the giant to keep selling more mortgage policies.

Why would states be part of this hustle? Money. In exchange for limp-wristed regulations, they collect taxes and fees from the corporations. But each new state entering this game offers lower taxes to entice captives to locate there, thus compelling all states to shrink their take to stay in the game.

The real captives, as usual, are the consumers, who'll end up bamboozled by the deceit, as well as us taxpayers, who'll be asked to bail out the deceivers. It's a losing game.

From Regulating Comcast To Joining It

Meredith Baker is hardly a household name, but if you have cable television, her work might soon be entering your household.

That's because she is one of four members of the Federal Communications Commission who voted in January to approve Comcast's takeover of NBC. Okaying this takeover means that, for the first time, a giant cable TV provider will now control its own national TV programming network – an anti-competitive concentration of media power that bodes ill both for consumers and democracy.

But Ms. Baker, a Republican and former Bush official, has long been an anti-regulatory corporate ideologue – she even called mergers "consumer-enhancing and job-creating deals," which is the exact opposite of how they really play out. So her vote to let Comcast swallow NBC was no big surprise.

But four months later, a hickey has popped up on Baker's vote. It turns out that she's now leaving the FCC, and guess where she's going. Yes, to the Washington office of the newly merged Comcast-NBC behemoth, where she'll work as a highly paid lobbyist.

The New York Times reports that some are criticizing her spin through the government/corporate revolving door as "ethically questionable." No, it's not. It's ethically corrupt, no question about it! Even though she has to comply with a two-year waiting period before lobbying the FCC itself, she's allowed to start lobbying Congress and the rest of the executive branch immediately.

The head of Free Press, a media reform group, calls Baker's lucrative merger with the very corporations she helped merge a blatant example of "a so-called public servant cashing in ... No wonder the public is so nauseated by business as usual in Washington, where the complete capture of government by industry barely raises any eyebrows." Exactly.