Common Sense Hailed As Innovation.

To give everyone an idea how backward healthcare administration is in this country, read the following report touting the bold innovation instituted by CIGNA, making Quicken software available to some its members.

Only now, under the treat of regulation, does one the nation’s largest carriers make a step to help members organize their own healthcare records by offering access to a software program widely available to the public for decades. We’ve got a long way to go to fix this mess.

Story:

http://www.healthcarefinancenews.com/news/cigna-makes-quicken-software-available-health-plans

A Root of the Problem

Great article below uncovering a root of our current financial disaster.  The euphoria of prosperity clouded reason.  Despite the hysteria, a few were wise enough to see the inherent dangers and voice their dissent.

We must never forget that the past is a guide to our future.

http://www.nytimes.com/1999/11/05/business/congress-passes-wide-ranging-bill-easing-bank-laws.html

Numbers without Meaning

Numbers without Meaning

I’ve been avoiding the furor over bailout spending and executive payouts for 2 reasons, previous coverage and exhaustion.  After dedicating much of this space to TARP earlier in the year, I was pleased to see the media push the issue into the spotlight.  The story is now ubiquitous, cavernous, incessant, and, despite my contempt for corruption, I’ve grown weary.  But the story below has blown my mind and made the wound fresh again.

Apparently Goldman Sachs is planning to return its TARP funds by mid-April.  The move is not the result of any newfound stability within the operation.  Instead, it is a means to avoid public scorn for being a corrupt, inept, and disorganized institution completely out of step with reality.  Rather than acknowledge nationwide frustration with a company that saw its net-worth plummet into oblivion while at the same time setting a record for executive compensation, Goldman Sachs hopes to obscure itself from its role in sinking the country by giving back the $10 billion in TARP funds that were absolutely essential for their survival just a few months ago.  By giving the money back, the bank hopes to escape from the public relations disaster.  And they are not alone, JP Morgan Chase, who plan to spend $138 million on two new corporate jets and a luxury airport hangar, also plan to return their TARP funds to the government.  Once they do, they’ll go ahead and finish their air travel upgrade, free of any public dissention.  After all, Jaime Dimon, JP Morgan’s CEO was quoted just two weeks ago saying, “When I hear the constant vilification of corporate America I personally don’t understand it.” Clearly.

Of course you don’t, Jaime, neither do any of your colleagues.  What is more troubling is that none of you are willing to understand it.  The bailout was intended to keep the foundations of our economy intact by keeping your businesses alive. Now, more than ever, it is clear you should have been allowed to fail (that would have been better for you, as then your bonuses never would have been under the threat of congressional rescission).  You refuse to learn from your mistakes and develop better, more efficient business models.  You are intent on running everything straight into the ground so long as you can continue to line your overstuffed pockets.  You claim that bonuses are essential to retain your top talent. Your companies have all devalued and eroded the global economy, you don’t have any talent.  You did not require government funding, you just got in line for free money that the government never should have offered.  But you took it, saying it was necessary.  Now, under pressure for inept practices, you are eager to return it, despite no considerable gains in your performance. You have no credibility, no integrity, and deserve no respect.  Oblivious to the frustration of millions, whose lives are stalled and even destroyed by your greed; continue on in your opulent, wayward, stupor.  You are worthless.

Goldman Sachs to Return TARP Funds by Mid-April:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aW2jw0bHcg3s&refer=home

JP Morgan Chase Spending Millions on New Jets and Luxury Private Airport Hangar

http://abcnews.go.com/Blotter/WallStreet/story?id=7146474&page=1

Chase Will Repay TARP Funds Before Making Jet Purchase:

http://dealbook.blogs.nytimes.com/2009/03/23/jpmorgan-to-proceed-with-new-jets-and-hangar/?hp

Expanding Out By Dumbing Down

Expanding Out By Dumbing Down

NBC Universal is changing the name of its SciFi Channel to SyFy based on a myriad of considerations including everything but proper use of the English language.  In order to offer a “broader range of content,” and have trademark control of the brand, NBC Universal will make it easier for people to forget the proper origins of its (granted, abbreviated) name.  Just as doughnuts became donuts and drive throughs became drive thrus, sci-fi will only bear a scant trace of its original foundations, science and fiction. Soon enough, SyFy will enter the lexicon of blogs, texting, and likely find its own dictionary entry.  Make no mistake, this is entirely due to corporate policy, i.e. greed; the need for a brand to be “own-able, portable, extendable.”  And I have to say that I agree that it makes perfect business sense, you should be able to control your own brand.  But I have a problem with the collateral result of empowering a bunch of idiots who will have even further difficulty being able to spell properly.

I am not a fan of text-speak, questions beginning with contractions, or dumbed down abbreviations.  Moreover, I don’t find corporate creations legitimate additions to the language.  You will not ever see me describe something as gr8 when it is, in fact, great. Language is beautiful and sacred.  It is organic and evolving.  Lexicon changes based on oral expression, and further feed written language.  This is why we, mercifully for the sake of time, no longer express ourselves like Geoffrey Chaucer.  Just as “on the morrow” is replaced by the more direct “tomorrow”, slang terms like “trainspotting” and “hook-up” rightfully find their space in official dictionaries.  But corporate constructs and laziness do not represent linguistic evolution.  They serve to further devolve the language.  Though the trend will continue and be inconsequential to most, I will be happy to voice my opposition.

http://www.reuters.com/article/televisionNews/idUSTRE52F34W20090316

Rather Then Let It Crumble, Take It Down Brick By Brick

Rather Then Let It Crumble, Take It Down Brick By Brick

These days it is hard to look at the news without feeling daunted, dismayed, or disgusted.  Most stories, particularly anything involving financial services, cause us to feel all three.  I have been rendered inert by the preponderance of bad news flooding our society.  Revelations of corruption, extortion, and moral ambiguity by what were once seen as conservative pillars of responsibility have become so extensive that it is hard to know where to start.  Yet it is therefore a time when it has become more important than ever to be engaged and voice opinions.  Otherwise these travesties will continue on, and in greater number than they already have.  That is the lesson learned from the fleeting outrage brought by the collapse of Enron, Tyco, and WorldCom earlier this decade.  After only 5 years, we have been besieged by the complete pollution of the American finance, auto, and insurance industries.  Corruption is inherent in mankind and therefore eternal, but it can be tempered by an active society.  Technology has enabled us to find more forums, this blog being an example, but it has also allowed us to withdraw further into isolation with ipods, blackberries, and cell phones.  With multiple outlets, it is increasingly difficult to find a wide audience.  Major media outlets are all controlled by large corporations and have their own agendas, and when a comedian like Jon Stewart provides the loudest voice for journalistic integrity it is clear we are living in a state of decay.  But rather than succumb to the pollution that surrounds us we should root it out, reconstruct, and build anew.  This is an unprecedented time that requires renewed and profound vigilance.  All is not lost, there is still positive to be found, Jon Stewart being an example.  His frustration should inspire greater concert to us all to speak up and become involved.  Let the outcry shake out the corrupt in our government and our industries.  Let them hear from us on the streets and in our offices, as well as on the web.  This November marked a major step for change in our political system, but necessary work ahead will not be done solely by who in office.  We have to remain engaged for anything positive to take shape.  Prosperity will not be delivered, it is up to us to create it.

Bad Example

Take a moment to read the article below and the corresponding study by the  PNHP expressing the numerous flaws in Masschusetts’ so-called “universal” health system.  The study reflects the reality of the faulty program in Masschusetts, which is already nearing bankruptcy and dramatically increasing healthcare costs for low-income families.  Despite these shortcomings, the soundbyte of offering a universal system is powerful on the political stage, and has led many to look to Massachusetts as a prototype for nationwide healthcare reform.  Such a suggestion is ludicrous, and any attempt would be a colossal waste of time and resources serving only to exacerbate the healthcare dilemma we face.  I am unfamiliar with the single payer system suggested by the PNHP, but as stated in an earlier post, any proposed solution has its shortcomings.  Nevertheless, the Massachusetts system is a mess, shortsighted and outrageously expensive.  Any solution for increased access to healthcare will require a drastic reshaping of the medical insurance industry, which must increase coverage, release control of information and increase transparency; all measures that would negatively affect their profit margins and have heretofore been rejected.  But considering that 31 cents of every healthcare dollar is spent on administrative costs, shouldn’t there be a universal outcry to restrict the control of insurers?  They are clearly inefficient.  The government is certainly no model of efficiency, but there needs to be a unilateral move for reform.  That means collaboration from insurers, physicians, providers, and both state and federal government.  Quite an undertaking to be sure, but let’s hope we move forward with a better plan than the one enacted in Massachusetts.

The Failure of the Massachusetts Health Care System:

http://www.healthcarefinancenews.com/news/pnhp-massachusetts-healthcare-system-failure

Ousted

Ousted

 

After solidifying Merrill Lynch’s depth charge acquisition by Bank of America, former Merrill CEO and unabashed bonus seeker John Thain is rightfully out of work.  After pulling in over $54 in 2007 from Goldman Sachs, Thain accepted a $15 million signing bonus to become CEO of Merrill Lynch.  In his short time there, he dutifully spent $1.2 million redecorating his office to ensure a comfortable perch to watch as the near century old Merrill steadily moved toward the brink of collapse.  In September, Thain and Kenneth Lewis negotiated the merger of Merrill Lynch with Bank of America; a move that has been nothing but an albatross to B of A.  Despite the precipitous decline of Bank of America based on the poor financial markets and toxic assets of Merrill Lynch, Thain still had the voracious audacity to request a $10 million bonus from the board for his efforts.

 

John Thain was formerly known as a Mr. Fixit, now he should be rightly seen as nothing more than an avaricious parasite seeking to gain from the world’s losses.  A man completely out of touch with his position, oblivious to the responsibility he held for his own workers as well as the general public.  Of course he has already made more money than can be spent in a lifetime, but he should not be allowed to disappear into affluent anonymity. He should rightly become a punchline.  The man is a disgrace who encapsulates the endemic greed that has poisoned and sunk our economy.   No, he is not alone, but his defiant gluttony has brought unwanted fame that business schools and mentors should never allow to fade.  Here is an example of what not to do, of who to guard against, in every business arena.  Think of the jobs that were lost under his distorted and myopic tenure.  Think of how many jobs could have been saved by remunerating just his 2008 signing bonus.  These are the kind of lessons we need to learn from this trying time.  Yes, greed is inherent in humanity and will never be rooted out.  But we can see the poison of greed in our corporate system as we pay its ever increasing cost.  Each day brings more headache and greater struggle to millions; people like John Thain are at the root of the evil.  Do not forget the trustees who granted these salaries, and all the other executives straining for their own share of the pelf.  This whole culture has to change, and that requires public outrage and vigilance.  We have not seen the worst of it yet, but each day someone like Thain is ousted is a step in the right direction.  Good riddance.

 

John Thain Agrees to Leave Bank of America

http://www.bloomberg.com/apps/news?pid=20601087&sid=apwXZlxMaUm4&refer=home

 

Eroding Giant

TARP Case Study

 

Below are articles outlining the use of TARP funds by Bank of America, which is taking on water thanks to their acquisition of Merrill Lynch.  As bad as the news is, the details provide a productive use of bailout funds, but it certainly is alarming to see that, not only the toxicity of Merrill Lynch, but also the awful (and high priced) recommendation of outside consultants J.C. Flowers and Fox-Pitt.  Since announcing the merger, Bank of America stock has lost over 75% of its value.  In order to stabilize, the company is now preparing to lay off 35,000 workers.  This begs a reiteration of the question, what on earth did John Thain (CEO of Merrill Lynch) expect a $10 million bonus for? 

 

Details of the Additional $20 Billion for Bank of America to Stave Off Crisis Caused by Merrill Lynch Acquisition:

http://money.cnn.com/2009/01/16/news/companies/bofa_new_bailout/?postversion=2009011609

 

Colin Barr’s Editorial on Bank of America’s Toxic Acquisition of Merrill Lynch: 

http://money.cnn.com/2009/01/15/news/bofa.unfair.fortune/index.htm?postversion=2009011515

The Call For Transparency

The Call For Transparency

The public demand for transparency concerning bailout funds is mounting.  On Monday, Fox News filed suit against the Fed for its refusal to declare details regarding the Troubled Asset Relief Program, citing a violation of the Freedom of Information Act.  This is a bold and exemplary move.  The impetus for the case comes from a November request of the FED by Fox Business News for full disclosure on the source, recipients, and use of TARP funding.  The FED denied the request, and now Fox News is taking them to court on behalf of our public right to know how our money is being spent.  (Read story, http://uk.reuters.com/article/marketsNewsUS/idUKN1235009220090112)

Further insistence is brought today by The Huffington Post, where Thomas B. Edsall highlights the duplicity of statements that were made at the time TARP funding was awarded and the actions we have witnessed.  (Read story, (http://www.huffingtonpost.com/2009/01/08/the-end-of-bailout-transp_n_156472.html)  As Edsall states in his piece, this story is not taking center stage on our media outlets.  Certainly, in consideration of the multiple entries in this space on the same topic, I agree. 

Again, without a public demand for accountability, our country will only sink further into the oblivion caused by corporate duplicity and hubris.  The fact that two seemingly disparate media outlets, Fox and Huffington, are rallying for the same cause is a triumph.  This is not a partisan issue, it is a national issue.  Beyond that, it is not limited to the bailout, it is an example of the ethical chaos that has caused our financial devastation. This is our money, we are entitled to accountability.  The architects of the bill said so themselves.   

We Need More

We Need More

 

The era of the bailout thickens.  FED Chief Benjamin Bernanke made public comments stressing the urgency of releasing the remaining $350 billion of TARP funding to banks.  The move is expected to put pressure on the House to release the funds in concert with the request of President-elect Barack Obama.  However, as I have highlighted a few times in this space, we still have no clear window into how these institutions are utilizing the funds they have already received.  The Associated Press targeted 16 institutions for disclosure and was summarily denied.  With his comments, Bernanke is acknowledging the severity of our economic predicament, which also outlines his own underestimation of the crisis just a few months ago.  The lack of transparency in the use of TARP funds is well documented.  Yesterday, the FDIC requested banks disclose their use of the funds.  Not surprisingly, this request was met defensively by the banking industry.  As the FDIC is trying to ensure that these funds are being used for lending to ease the credit crisis, and to make certain they are not being moved into bank reserves.  For some reason the banks are refusing full disclosure.  They were willing to concede some broad declaration.  This is ludicrous.  If any of us were to apply for a bank loan, we would have to supply the bank with our exact intention for the funds.   Now that the banks are on the receiving end of federal loans, the rules are different.  This is hypocrisy, plain and simple. 

 

Senator David Vitter (R-La) has introduced a measure to block the release of the remaining TARP funds.  The hopeful outcome of this action, from my standpoint, is that we can solidify a framework for the responsible use of this massive loan.  Without negating the need of federal assistance to solidify the financial industry, it is necessary to determine transparency.  If indeed further federal funding is necessary to stave off total economic calamity, we should be all the more determined to know the exact use of our tax dollars to determine what is working and what is not.  If these corporations are unwilling to disclose their business practices, it only adds to skepticism of their business practices.  Until proven otherwise, it is fair to presume these funds are being hoarded in their reserves, to pay egregious bonuses to high level executives, and further misuse that has resulted in their own demise.  Without clear parameters and disclosure, the government is throwing our money away on supercilious business leaders who will only bring our economy down even further in an effort to maintain their own stake. 

 

Capitalism is a system that ensures survival of the fittest, and that means yesterday’s giant may be today’s memory.  If that is the case, so be it.  The uncertainty of these times will provide opportunity for new names with better business practices and greater efficiency.  Some of the giants of today will fade and even fail due to their own mistakes.  The giants of tomorrow will incorporate those lessons to create a better environment.  That is how capitalism works.  Ultimately, bailout funds are for our greater national economic survival.  They are not life rafts for a sinking ship.  If more money is needed, we need to know why.

 

 

 

 

 

Bernanke urges release of TARP funds and need for additional Federal Funding

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aic5mGSBvQ4E

 

FDIC asks receiving banks for disclosure on TARP funding

http://www.bloomberg.com/apps/news?pid=20601087&sid=atDyzLXtnMRU&refer=home

 

Senator Vitter introduces measure to block release of remaining TARP funds

http://www.reuters.com/article/politicsNews/idUSTRE50C4YQ20090113