The Corporation of America

By Jack Hoffman

When the Founding Fathers sat down to draw up how the new nation – America – would be governed, they settled on a form of government (a republic) that would be guided by a document that would protect all rights of its citizens. When the Constitution and Bill of Rights were finally signed, we became the Republic of the U.S.

Contrast the framer’s vision of a republic with that of a democracy. In a democracy, the majority rules, either directly or through its elected representatives, with no oversight. Thomas Jefferson feared that law written by the majority under a democracy in power would lack any regard for the basic rights of all citizens. That, in turn, could lead to what the framers feared most – a monarchy.

Nowhere in either of those precious and brilliant documents will you find democracy. A democracy and a republic are as different as apples and oranges.

The new republic would be governed by a preset document that would spell out the rights of all, e.g. the Constitution and The Bill of Rights. It would have a judiciary branch to rule against any law written by a congress that was not constitutional.

Can you imagine The Battle Hymn of The Democracy?

Today, this government is not what Jefferson (the author) envisioned, a free republic.

Welcome to Corporate America – a nation governed by an oligarchy, a country ruled by a few – corporations. In 1999 the Clinton Administration, along with some Democrats and Conservative Republicans, pushed to pass the Financial Services Modernization Act. In a few words, the Clinton crew eliminated all the reform legislation that Roosvelt introduced to control the banking powers.

The banks got what they wanted: little or no regulation. With no oversight and freedom from regulations, mergers that violated all existing anti-trust laws flourished. Derivatives that gave Wall Street new unregulated institutions like hedge funds made the banks even more powerful and wealthy.

Larry Summers, who is one of the chief economic advisers to President Barack Obama, and Neal Wolin, who is now Assistant Secretary in the treasury, were the architects of those un- regulatory Clinton Administration laws back in 1999. It’s just been revealed that Mr. Summers last year alone earned over $2 million in speaking fees from many of the banks that got TARP money. He also earned almost $3 million last year from D.F. Shaw, a leading hedge fund. The stories go on.’

From 1973 through 1985, the U.S. financial sector accounted for about 16% of the GNP (Gross National Product). In the 1990s, it went from 21% to 30%. In this decade, it soared to over 41% of a GNP that is $14 trillion. That’s almost $6 trillion in services these barons of Wall Street produced. Citi Bank just three years ago had a 35% return on their capital investment, the largest in the world.

Over the years as their wealth increased, their power over Congress became well documented. To protect their private fiefdoms, financial institutions spent $5 billion in the last 10 years paying off a Congress that was more than willing to write the laws favorable to them and scrapping laws that were not.

Hank Greenberg, former founder of A.I.G., was once quoted saying that he wanted to create not just the largest insurance company in the world, but also the wealthiest. A corporation so large that it would become invincible and protected from any regulations, using his power as a threat. Here is a good question: if all these investment houses were so smart, why insure trillions of dollars in mortgages with a company that was un-regulated and free from any oversight? All these smart fellows of Wall Street were so arrogant, knowing that if they were losing money they could play a chicken game with a government they had in their pockets. They weren’t so wrong.

I once wrote here that no civilization ruled by a corrupt government could ever survive without fair and just laws. If the representative’s laws were sold and even written by those with the money and power this government will not last long. How right Jefferson was when he said every 20 years a revolution might be necessary. How prophetic was the guy?!

Sadly, we all need the banks, the military industrial complex, Silicon Valley. Homeowners who need a mortgage, and what is unfortunate they are the fiduciaries of our life-long savings like 401 and pensions that they gambled away with greater odds of losing than a Las Vegas casino. What we don’t need is the way they are now structured, and we need to get rid of the criminals that have defrauded us all.

While Congress and the media played a kabuki dance for one week over the $150 million in bonuses that the AIG crooks took for themselves, the real story was being overshadowed: the $80 billion A.I.G. used to pay claims to all the major players who played that debt-swap game of mortgages The money ($20 billion) was paid to six foreign banks and several US banks. Bank of America and Merrill Lynch carved up almost $40 billion in bonus money just before they announced Merrill was broke and just before the take over by Bank of America in December. BAC also used TARP money for the buy-out of Merrill, as reported several months ago by yours truly.

While congress debated bailout money for General Motors, they wanted workers to renegotiate contracts already renegotiated the year before. They never asked that of all those bankers, and I mean all those who were getting bonus money, along with TARP funding, that they should renegotiate. They never mentioned bondholders. Why should they? Workers vs. boards of banks? Are you dreaming? How many bank executives were moved out under Obama? Zero. Surprise, surprise! Many of the board members at General Motors sit on the board of Bank of America.

Talk about a symbiotic relationship. Just think about this: Summers, Geithner and several others in this administration favored de-regulation now they want regulation. Am I in some Wonderland? Wake me when it’s over.

Elizabeth Warren chairperson of the Tarp Commission that is overseeing how all this money was spent has testified to congress that nothing will work unless we break the major banks and the officers who think they are the new untouchable. Something I have always advocated. She has also criticized treasury for holding back certain information.
And Geithner wants one trillion dollars more.

Obama recently told the bankers to cut all that bonus crap and those reckless financial games. If you don’t- “I am the only one between you and the pitchforks”. Will he have the strength and cajones to fight congress and do the right thing- break them up?

While writing this I couldn’t help thinking of another oligarchy that ruled Worcester from the 40s’ to the late 60s’. Their vision of a controlled Worcester can be seen today in a deserted parcel of land that sits on Madison Ave that was once called Wyman and Gordon.

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