Lonesome Tree in Sandhills

Sunday, October 12, 2008

Fox Guarding Henhouse - Explained

After our nation's "henhouse" was cleaned out in 1929, trust in banks was destroyed by 1934 when the SEC was formed to restore confidence to battered investors. Pres. Roosevelt appointed Joseph P. Kennedy its first Chairman; and when asked why Kennedy, a stock speculator, FDR said simply – “Set a thief to catch a thief.”

How well has that worked? History repeats itself – in 11 stock market crashes since WWII. Now trust in government is gone bust & trust in banks is once again hanging by a thread. Whatever happened? Farmers Bush-Cheney & Company (Farmer Bush & Team) ignored history in the name of eradicating that ultimate evil - regulation. Our nation’s 5 largest investment banks complained of burdensome regulation… poor babies whined!

The Fox – the nation’s largest banks - had already formed “holding companies” to shield themselves from oversight of subsidiary “regulated” banks. In 1999 under Sen. Phil Gramm's leadership, the Gramm-Leach-Biley Act allowed financial holding companies to offer banking, securities, and insurance products under one corporate roof. The law didn’t permit the SEC to examine holding companies’ books nor require sufficient equity to meet the SEC’s capital requirements. The SEC needed new legislation to close that gap – especially after global hedge fund, Long-Term Capital Management (LTCM) collapsed in 1998, and the following stock market mini-crash in 2000.

The gap in SEC enforcement was left gaping by the Senate Committee on Banking (Financial Institutions, Securities & Investments Subcommittees) and the House Financial Services Committee - which have jurisdiction over the SEC & Securities Investor Protection Corporation. These Committees are responsible for oversight of government-issued securities, financial exchanges and markets, financial derivatives, accounting standards, and insurance. Who was in charge of the henhouse?

By 2001, Fox knew Farmer Bush & Team had locked the “shotguns” away rather than “keep it behind the door” as earlier SEC Chairmen did. Still believing Fox is best at catching a thief in the henhouse, Farmer Bush & Team - armed with a Republican majority in Congress - sat on the porch smoking… what? Pot???

In 2005, the year after the SEC tossed out capital requirements, Farmer Bush & Team Congressman Christopher Cox in charge of guarding the henhouse. Rep. Cox (R-CA) spent years leading efforts to block investor lawsuits & investigation of complaints, and to keep rules favoring executive stock options. Yep… Rep. Cox was a true Friend of Fox (FOFox).

As new SEC Chairman, FOFox Cox dismantled the risk oversight office assigned by former Chairman Donaldson, and then fully embraced Bush & Team’s new Treasurer, Henry Paulson. Paulson, Uber-Fox at Goldman Sachs, master-minded gutting of capital requirements in 2004. Not too surprising that FOFox Cox also embraced Uber-Fox’s ultimate plan to lock up ALL shotguns in Farmer Bush Team’s Cabinet, too. Farmers Bush-Cheney & Company quickly shushed complaints.

Fox & Friends were free to gorge on chicken to the point of becoming very sick. With bellies full of the offending evidence, Fox & Friends went to Uber-Fox who took it up with Farmer Bush & Team to… what? Put them out of their misery? Nope… Uber-Fox begged them to buy more chickens while Fox & Friends upchucked all over the farm & then some. GM-Fox will be next after gorging on SUV profits. With Paulsen’s blueprint, will there be ANY chickens left to reproduce a brood???

What would George Orwell say today? He’d probably repeat what he wrote in Animal Farm – “Some animals are created more equal than others.”

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