The Worm Turns?
Steve Manacek's post set me to thinking, yet again, about the utter supineness businessmen have displayed when under assault from the Obama administration and its allies in Congress. When the administration shoved him out as CEO of GM, Rick Waggoner went without a struggle. When the administration told banking executives they couldn't pay back their government loans until the administration was good and ready to have them do so, the banking executives simply tugged their forelocks, stared at the ground and replied, Whatever you say, Sir. When I wrote about this just over a year ago, I could find only one business figure of any standing--exactly one--who was willing to take on the administration, the financier Clifford Asness.
And so it remained--the business class, utterly supine--until the last month. Since then:
- On June 30, Joe Cassano, formerly of AIG, testified before the Financial Crisis Inquiry Commission. Cassano insisted that AIG knew what it was doing a lot better than the government ever did, that the government bailout of AIG accordingly proved a disaster, and that "there would have been few, if any, realized losses on the [now notorious swaps] contracts had they not been unwound in the bailout." Is Cassano right about this? I don't know. But it sure was refreshing to see somebody comport himself like a free man, talking back.
- On the same day, Gary Cohn, the number two man at Goldman Sachs, testified before the same commission. Although Cohn's manner proved conciliatory--he opened with an apology for failing to provide the commission with certain documents more promptly--he refused to give any substantive ground. Goldman had served its clients honestly and well, he insisted, valued its assets transparently, marking them to market every day, and accepted $12 billion as part of the AIG bailout only because the Fed pressured Goldman to do so.
- The next day, Jeff Immelt, chairman of GE, criticized Obama in a meeting with Italian executives. “People are in a really bad mood [in the US],” Immelt said, according to the Financial Times. “We [the US] ...have to become an industrial powerhouse again but you don’t do this when government and entrepreneurs are not in synch.” GE immediately issued an interesting press release. "Mr Immelt’s comments at a private dinner," the release explained, "focused on the relationship between business and government in general and did not single out President Obama." Although Immelt never expected to be quoted, the release suggests, he wasn't in a mood to engage in any sort of abject apology once he was.
During the Revolution, members of the business class played a central role in preserving our liberties. John Hancock. Tench Coxe. Gouverneur Morris. Today? Well, let's put it this way. Cassano, Cohn and Immelt don't exactly rise to the standard set by John Hancock, who quipped, when he signed the Declaration of Independence, that he wanted his name to be big enough for the king to read without his glasses. But talking back to the Financial Crisis Inquiry Commission and offering at least oblique criticisms of the adminstration--that's a start.
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Comments :
May '10
Re: The Worm Turns?
I'll second your post, Peter. It reminds me of Bill McGurn's remark on the latest podcast that profits are the source of FoxNews' and the Wall Street Journal's independence. The profit from the enterprise frees them to be critical of government, among other things.
I suppose there's another moral implicit in all this - if you're going to build an enterprise, do it well. If you don't do well, don't crawl to the government (or, more appropriately, the rest of us) for a rescue. And if you do take that government rescue, be prepared to field asinine questions from the likes of our resident fox-in-the-henhouse, Phil Angelides. It's part of the price you pay for a federal backstop.
May '10
Re: The Worm Turns?
I tend to agree that the premise is very much true, but that these are the wrong people.
If Jeff Immelt, the current champion rent-seeking pygmy trying to carve out his own (calculatedly green) path in GE as he follows a giant, is complaining about government not being in sync with industry, it is because he is whining that Cap'n Trade is taking too long to line his pockets with granted grandfathered carbon credits. And AIG trafficked too much in overturned buckets, under 80% of which were no hard assets, all insured without backup reserves. Goldman is also cranky that their dream of carbon credit trading empire dominance is cutting into this year's unearned bonuses.
I'd like to see true mid-sized industrial company- places where they still make stuff- leaders speak out, along with people at Ford, SW Air, FedEx, 3M, and the like. Maybe a few natural gas suppliers and transporters. But, of course, they all have too much to lose if they anger the Supreme Leader and get the bureaucracy set loose on them.
Jun '10
Re: The Worm Turns?
I was a bit mystified at first, as leaders of American business caved to the Obama administration without a fight. But I realized they were just responding to the incentives. What exactly these incentives may be are not always easy to understand, but people will try to act in they're own best interests. Unfortunately, the msm, who are protected by the constitution in order to keep us informed, have essentially become an arm of the government. They no longer expose corruption, but hide it, that is, as long as the perps are Democrats.
Jun '10
Re: The Worm Turns?
You have read my mind on this issue, Mr. Robinson. Thank you! My head bleeds from all the scratching I have done while watching our industry "giants" squirm like worms before our belicose politicians. Once more I must ask, where were the judges when Obama broke all the rules of secured creditors in bankruptsy during the GM and Chrysler takeovers? How do the CEO's of our great oil companies sit morosely while the nitwit lawyer politicians, who have never run a business, chastise and threaten them from their pompous seats on high? Military generals keep tight lipped while dwarf Senators like Boxer demand not to be called "ma'am". The disrespect and rudeness shown during these hearings is utterly contemptible. The spinelessness of those testifying is mystifying. Did Obama learn to be a bully during his short run as a Senator? This is the United States of America. I thought we were all equal as citizens of this great nation.
Re: The Worm Turns?
You're right about News Corp., Matthew. The profits from Fox News give the entire corporation room to maneuver--and to speak its mind.
Duane, you make a good point, just as you always do. May we put you in charge of the mid-size company CEO watch? When manufacturers in the middle of the country start talking back to the administration, we'll pop a few corks.
Re: The Worm Turns?
Here is the problem Peter. In many cases the government is one of if not the largest customer these businesses have. So they are afraid to rock the boat when they are makigned. Take WellPoint. Sibilius and Obama both told abject lies about cancelling policies when women have breast cancer. Angela Braly spoke up and asked them to stop, but the threat of the government moving there business is too great a threat to the stockholders. Socialism breeds politicalization of private sector companies. We need to get the government out of our businesses in order to take back our freedoms.