David Sirota: Health Care's 13 Tyrants
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Friday, July 31, 2009
Thursday, July 30, 2009
Perry Living Large by HG Ratcliffe
AUSTIN — On the dollars of taxpayers and wealthy donors, Gov. Rick Perry — reared amid the cotton fields of West Texas — gets to live the life of the rich and famous, traveling the world meeting captains of industry, sports stars and royalty.
The taxpayers shell out $108,000 a year to rent him an estate west of Austin, and they spend another $168,000 on chefs, stewards and housekeepers for the Perrys' creature comforts.
Piano maestro Van Cliburn once played at the Governor's Mansion for first lady Anita Perry's birthday. Dallas aerobics guru Dr. Kenneth Cooper once gave the governor free medical tests. Expensive gifts to Perry have included 16 pairs of custom-made boots, a pair of spurs, hunting trips, sports tickets and a football helmet signed by former Dallas Cowboy Emmitt Smith.
The perks of being governor are not unusual across the nation, and in many states, governors such as Perry are also the de facto heads of state business recruitment.
Wealthy donors and corporate-funded foundations, for example, have flown Perry to the Bahamas for scuba diving; to Paris, Rome and Dubai for business promotion; and to San Diego, Calif., for the one-time Texas A&M yell leader to attend an Aggie Muster for A&M graduates.
There was a trip to Istanbul for the Bilderberg conference, hosted by Queen Beatrix of the Netherlands. A trip to the Middle East had on its schedule meetings with then-Israeli Prime Minister Ehud Olmert and Jordan's King Abdullah and a “breathtaking sunset cruise on the Red Sea.”
Perry, who took office in 2000, said in a recent interview with the San Antonio Express-News that his only motivation as governor is to affect public policy: “This is not about me. It's not about whatever the people would perceive as the perks of being governor. ... I get to go do a job every day that makes a difference in people's lives. I find that very satisfying.”
Perry spokeswoman Allison Castle said the governor's amenities are like those of previous governors and other governors across the country.
“Texas is the 10th-largest economy in the world. We're the No. 1 exporting state. We have an economy that is an economic powerhouse,” Castle said. “Carrying that message to other countries, other leaders, business leaders, state leaders is an important mission.”
The Governor's Mansion was a combination museum and full-time residence until the Perrys moved to a 4,602-square-foot house rented by the state for $9,000 a month while the official mansion underwent renovations. The mansion subsequently was hit by an unsolved arson last year.
Dinner for donors
Perry's campaign account pays the state between $3,000 and $17,000 a month to cover expenses for events ranging from hosting a holiday reception for the Capitol press corps to luncheons with civic groups such as Ballet Austin.
Dinner at the mansion also has been a reward for Century Club members, people who have donated at least $25,000 to Perry's political account and agreed to raise $100,000. Nearly 95 people attended the 2007 dinner, the last for which a state record exists.
“The governor is living very high on the hog for a farm boy from Paint Creek at taxpayer's expense,” said Tom “Smitty” Smith of Public Citizen.
But Perry is far from being the only governor to live in state-provided housing. Most states have an official residence, though some governors such as California's Arnold Schwarzenegger do not live there.
The New York Governor's Mansion is a part-time residence in Albany. Gov. David Paterson got into hot water with his constituents for spending $21,000 on two Turkish rugs for the mansion last year. He also was criticized for spending $19,000 in taxpayer money to attend President Barack Obama's inauguration.
Castle noted that Perry's travel is not paid by taxpayers.
Texas One, a corporate-finance foundation, pays for much of Perry's business development travel. Other travel is paid for by his political committee or campaign donors. And some is financed as in-kind contributions from specific wealthy donors or interest groups.
Scuba diving was on the agenda in a 2004 trip when San Antonio investor James Leininger and beer distributor John Nau and investor Charles Tate, both of Houston, paid $40,400 to fly Rick and Anita Perry and others on private jets to the Bahamas for a trip that included discussions of public education policy.
Houston's Gulf States Toyota owner Thomas Friedkin gave $9,000 in travel to Perry's campaign last year so the governor, his wife and their daughter could spend two days in Key West, Fla., for a fundraiser.
Perry and his wife leave this week for San Diego to raise money for his re-election. They visited that city this time last year, a trip that included a visit to the San Diego Chargers training camp.
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Sunday, July 26, 2009
Isabelle Redford ,(7 year old), funds Orphanages by Alice Maggin
Kansas Girl, 7, Makes Art for Charity, Builds Orphanages With Her Profits
Isabelle Redford Sells Her Artwork Through the Global Orphan Project
By ALICE MAGGIN
July 10, 2009—
Seven-year-old Isabelle Redford is a long way from grown up, but her art is more than just kid stuff.
"I kind of always drawed because I loved to draw as I grew up," Isabelle said. "And I just was an artist."
Her drawings are good enough to earn some real money but she isn't spending it on toys or candy.
"I like to draw cards because I can raise money to help the orphans and help them have a home to live in," Isabelle said.
Helping orphans has become Isabelle's cause. It started two years ago when she was 5. Her mom, Kelly Redford of Parsons, Kan., told her a story about twin girls in Haiti whose mother died during childbirth.
"She immediately looked at me and said, 'What can we do, we have to help,'" her mother said.
Isabelle said, "I brainstormed and I thought of a way to help them. ... I thought of cards because I love to draw."
She started by selling cards at garage sales and to her friends and family. Her sales took off and, now, the cards are sold through the Global Orphan Project in Kansas City, Mo., a charity that builds and runs orphanages around the world.
So far, Isabelle has earned more than $10,000 -- half of that was enough to build an orphanage in Haiti, where she visited last month.
"It was the first night we were there and ... I saw the girls and, as I came to where my house was, they were chanting my name, and I thought that was really amazing," she said.
Isabelle spent two nights with her new friends at the Isabelle Redford House of Hope. "I also loved the girls in my house," she said. "I was glad that six girls had a place to live. We were just friends immediately and I, we didn't have to speak the same language. We just were having fun and we laughed and played a lot."
Isabelle Works Toward Her Next Project
But one orphanage is not enough for Isabelle. She continues selling her artwork and collecting money to put toward her next project.
Her mother said, "I thought we'd get to $5,000 and then she'll feel like she's accomplished something and she'll be done. We got to $5,000 and the amount of money that she received was actually more than she needed. ... And she quickly said, 'Well, no Mom, this is a perfect amount for the start of my second home.'"
The Global Orphan Project is about to break ground on another Isabelle Redford house -- this one in Malawi, Africa.
"I really want to do this all over the world where they really need it," Isabelle said.
Her mother is not surprised. "Her heart and her compassion and her love is just so huge, and really from as early back as I can remember," she said, "she's always been full of compassion."
Copyright © 2009 ABC News Internet Ventures
Thank You By Jeff Matthews
Tuesday, April 21, 2009
Thank You Michael Milken, Two Years Too Late
Why Capital Structure Matters
Companies that repurchased stock two years ago are in a world of hurt.
—By Michael Milken, The Wall Street Journal
If you didn’t have enough reason to spit your coffee out over the newspaper this morning, what with the President of Iran calling Israel “a cruel and repressive racist regime,” there’s always the op-ed page of today’s Wall Street Journal.
That’s where Michael Milken writes the two-years-too-late observation that there are times when “even a dollar of debt may be too much for some companies.”
Milken, for those too young to remember, was the finance whiz whose grad-school observation—that a collection of junk-rated securities could actually be a safer investment than the individual ratings implied—led eventually to the last great credit crisis in America, when Drexel and the rest of Wall Street leveraged Corporate America just in time for the 1990 LBO-Bubble collapse.
And, ironic as it seems, Milken fingers much of today’s woes on the “return-value-to-shareholders” mania of yore:
Without stock buybacks, many such companies would have little debt and would have greater flexibility during this period of increased credit constraints. In other words, their current financial problems are self-imposed. Instead of entering the recession with adequate liquidity and less debt with long maturities, they had the wrong capital structure for the time.
Now, we here at NotMakingThisUp have no argument with Mr. Milken’s observation on the dangers of too much debt in a capital structure.
It’s just a little too late to matter.
By way of comparison, we’re reprinting here our take on the subject back when companies were still pedal-to-the-metal on the road to self-destruction.
Note that we spared nobody: not CEOs, not Boards of Directors, not Wall Street Investment Bankers, not Wall Street Analysts, and not even Hedge Funds, of which we are one.
Wednesday, August 08, 2007
The Shareholder Letter You Should, But Won’t, Be Reading Next Spring
Dear Shareholder:
Well, it seemed like a good idea at the time.
I am referring to your board’s decision to approve a massive share buyback and huge special dividend last summer, when the buzzwords going around Wall Street were “returning value to shareholders.”
Why we did it was this: a smart banker from Goldman Lehman Lynch & Sachs came in, all gussied up and looking sharp, and made a terrific PowerPoint presentation to the board with multi-colored slides that showed how paying a special $10 a share dividend, plus buying back a bunch of our stock at the 52-week high, would “return value to our shareholders.”
We should have thrown the fellow out the window, along with his PowerPoint slides, but what happened was, my fellow board members and I were so busy deleting emails from our Blackberries that we just didn’t notice the last slide showing (in very tiny numbers) the “Trump-style” debt we would be incurring to do so.
We also missed the footnote showing the fees that would go to Goldman Lehman Lynch & Sachs for the courtesy of their showing us how to wreck our balance sheet.
Those fees, I am embarrassed to say, amounted to more money than we made the quarter before we “returned value to shareholders.”
But the fact is, we’d been getting so much pressure over the last few years from the hedge fund fellows who own our stock for ten minutes tops, not to mention the so-called “analysts” on Wall Street (around here we call them "Barking Seals"), to do something with the cash...well, the truth is we just couldn’t stand answering our phones any more.
So, in order to finally start getting things done instead of spending all day explaining to these hedge fund fellows and the Barking Seals on Wall Street why we weren’t “returning value to shareholders,” we decided to do the big buyback and the big dividend.
And for a few weeks there, it was pretty nice.
The stock jumped, the phones stopped ringing, and the Barking Seals started congratulating us on the conference calls instead of asking us when we were going to get rid of our cash.
Unfortunately, not only did getting rid of our cash and taking on a huge debt load NOT “return value” to you, our shareholders, it actually crippled the company for years to come.
For starters, as you know, the aftermath of last summer’s sub-prime debt crisis is forcing perfectly fine companies to liquidate businesses at fire-sale prices…but we can’t take advantage of those prices, because we have no cash. And thanks to the debt we incurred “returning value to shareholders,” the banks won’t loan us another dime.
Secondly, as you also know, we’ve had to lay off hundreds of loyal, hard working employees to pay the interest expense and principal on all that debt, because unlike Donald Trump, we actually repay our debts.
Furthermore, as you probably don’t know, we’ve also scaled back some interesting research projects that had great long-term potential for the company, but were deemed too expensive to continue in light of the fact that we have no cash.
Now, I’d feel a heck of a lot worse about all this if we were the only company suckered into buying our stock at a record high price and paying a big fat dividend on top of it.
But I’m happy to report there were others who also did the same stupid thing.
For example, Cracker Barrel, the restaurant chain that depends on people having enough money for gas to get to its stores along Interstates across America, spent 46 bucks a share for 5.4 million shares of its stock early last year to “return value to shareholders.”Cracker Barrel’s stock now trades at $39.
And Scott’s Miracle-Gro, whose business is so seasonal it loses money two quarters out of four, put over a billion dollars of debt on its books with the kind of special dividend and share buyback we did.
Health Management Associates—a healthcare chain that can’t collect money from about a quarter of the patients it handles—paid shareholders ten bucks a share in a special dividend to “return value to shareholders” and then missed its very next earnings report because of all those unpaid bills and all that new interest expense it was paying.
Oh, and Dean Foods, a commodity dairy processor with 2% profit margins, returned all sorts of value to shareholders early last year—almost $2 billion worth—just before its business went to hell in a hand basket when raw milk prices soared.
So, you see, everybody was doing it.
And boy, do I wish we hadn’t.
Jeff MatthewsI Am Not Making This Up
© 2007 NotMakingThisUp, LLC
Jeff Matthews
I Am Not Making This Up
© 2009 NotMakingThisUp, LLC
Thank You Michael Milken, Two Years Too Late
Why Capital Structure Matters
Companies that repurchased stock two years ago are in a world of hurt.
—By Michael Milken, The Wall Street Journal
If you didn’t have enough reason to spit your coffee out over the newspaper this morning, what with the President of Iran calling Israel “a cruel and repressive racist regime,” there’s always the op-ed page of today’s Wall Street Journal.
That’s where Michael Milken writes the two-years-too-late observation that there are times when “even a dollar of debt may be too much for some companies.”
Milken, for those too young to remember, was the finance whiz whose grad-school observation—that a collection of junk-rated securities could actually be a safer investment than the individual ratings implied—led eventually to the last great credit crisis in America, when Drexel and the rest of Wall Street leveraged Corporate America just in time for the 1990 LBO-Bubble collapse.
And, ironic as it seems, Milken fingers much of today’s woes on the “return-value-to-shareholders” mania of yore:
Without stock buybacks, many such companies would have little debt and would have greater flexibility during this period of increased credit constraints. In other words, their current financial problems are self-imposed. Instead of entering the recession with adequate liquidity and less debt with long maturities, they had the wrong capital structure for the time.
Now, we here at NotMakingThisUp have no argument with Mr. Milken’s observation on the dangers of too much debt in a capital structure.
It’s just a little too late to matter.
By way of comparison, we’re reprinting here our take on the subject back when companies were still pedal-to-the-metal on the road to self-destruction.
Note that we spared nobody: not CEOs, not Boards of Directors, not Wall Street Investment Bankers, not Wall Street Analysts, and not even Hedge Funds, of which we are one.
Wednesday, August 08, 2007
The Shareholder Letter You Should, But Won’t, Be Reading Next Spring
Dear Shareholder:
Well, it seemed like a good idea at the time.
I am referring to your board’s decision to approve a massive share buyback and huge special dividend last summer, when the buzzwords going around Wall Street were “returning value to shareholders.”
Why we did it was this: a smart banker from Goldman Lehman Lynch & Sachs came in, all gussied up and looking sharp, and made a terrific PowerPoint presentation to the board with multi-colored slides that showed how paying a special $10 a share dividend, plus buying back a bunch of our stock at the 52-week high, would “return value to our shareholders.”
We should have thrown the fellow out the window, along with his PowerPoint slides, but what happened was, my fellow board members and I were so busy deleting emails from our Blackberries that we just didn’t notice the last slide showing (in very tiny numbers) the “Trump-style” debt we would be incurring to do so.
We also missed the footnote showing the fees that would go to Goldman Lehman Lynch & Sachs for the courtesy of their showing us how to wreck our balance sheet.
Those fees, I am embarrassed to say, amounted to more money than we made the quarter before we “returned value to shareholders.”
But the fact is, we’d been getting so much pressure over the last few years from the hedge fund fellows who own our stock for ten minutes tops, not to mention the so-called “analysts” on Wall Street (around here we call them "Barking Seals"), to do something with the cash...well, the truth is we just couldn’t stand answering our phones any more.
So, in order to finally start getting things done instead of spending all day explaining to these hedge fund fellows and the Barking Seals on Wall Street why we weren’t “returning value to shareholders,” we decided to do the big buyback and the big dividend.
And for a few weeks there, it was pretty nice.
The stock jumped, the phones stopped ringing, and the Barking Seals started congratulating us on the conference calls instead of asking us when we were going to get rid of our cash.
Unfortunately, not only did getting rid of our cash and taking on a huge debt load NOT “return value” to you, our shareholders, it actually crippled the company for years to come.
For starters, as you know, the aftermath of last summer’s sub-prime debt crisis is forcing perfectly fine companies to liquidate businesses at fire-sale prices…but we can’t take advantage of those prices, because we have no cash. And thanks to the debt we incurred “returning value to shareholders,” the banks won’t loan us another dime.
Secondly, as you also know, we’ve had to lay off hundreds of loyal, hard working employees to pay the interest expense and principal on all that debt, because unlike Donald Trump, we actually repay our debts.
Furthermore, as you probably don’t know, we’ve also scaled back some interesting research projects that had great long-term potential for the company, but were deemed too expensive to continue in light of the fact that we have no cash.
Now, I’d feel a heck of a lot worse about all this if we were the only company suckered into buying our stock at a record high price and paying a big fat dividend on top of it.
But I’m happy to report there were others who also did the same stupid thing.
For example, Cracker Barrel, the restaurant chain that depends on people having enough money for gas to get to its stores along Interstates across America, spent 46 bucks a share for 5.4 million shares of its stock early last year to “return value to shareholders.”Cracker Barrel’s stock now trades at $39.
And Scott’s Miracle-Gro, whose business is so seasonal it loses money two quarters out of four, put over a billion dollars of debt on its books with the kind of special dividend and share buyback we did.
Health Management Associates—a healthcare chain that can’t collect money from about a quarter of the patients it handles—paid shareholders ten bucks a share in a special dividend to “return value to shareholders” and then missed its very next earnings report because of all those unpaid bills and all that new interest expense it was paying.
Oh, and Dean Foods, a commodity dairy processor with 2% profit margins, returned all sorts of value to shareholders early last year—almost $2 billion worth—just before its business went to hell in a hand basket when raw milk prices soared.
So, you see, everybody was doing it.
And boy, do I wish we hadn’t.
Jeff MatthewsI Am Not Making This Up
© 2007 NotMakingThisUp, LLC
Jeff Matthews
I Am Not Making This Up
© 2009 NotMakingThisUp, LLC
Saturday, July 25, 2009
Phoebe Food Bank By Toan Lam
Here are some suggestions to help the hungry:
1.) Research non-profits in and around your area. Food Banks and Food Pantries are a good start. Then make a donation: As Phoebe shows us, no amount is too small. Or donate canned food.
2.) Time is money, and sometimes, it's the intention that is worth its weight in gold. Volunteer at a non-profit that helps feed the hungry in your community or create your own. I've learned that you can make volunteering fun. How? Get your friends involved and bring them along, I'm sure the extra helping hands will be welcomed. Also think about your hobbies or skills you have that you can share with other organizations or service oriented groups.
3.) Think about your skills or resources around you and do as Phoebe did... and just ask! Start a project of your own, then ask for help, donations and volunteers.
That's what I did, I have ten years of TV reporting, producing, videography, editing and writing experience. Like many Americans, I too am deeply affected by the down economy. After being laid off from my day job as a TV reporter for a news station in San Francisco. I knew long before I met Phoebe that too often people like her and stories their stories are lost in the crush of bad news and celebrity misconduct that seems to dominate the modern news cycle. A chance conversation with a friend led to an idea, and one idea led to several others, and now, I am running a fledgling project and soon-to-be non-profit: www.GoInspireGo.com. This is the hub that connects viewers and readers to my YouTube Channel (Where we create inspiring videos with suggestions or links at the end of every story where people could go to help the person/people featured in the video.)
Do No Harm
Do No Harm
By Michael Milken and Jonathan Simons, M.D.
The Wall Street Journal
June 20, 2009
Global corporations have raised nearly $2 trillion in public and private markets this year, a clear sign the economy has begun to heal.
This process shouldn't surprise investors any more than it would surprise a critical-care doctor that the immune system plays a key role in restoring a patient's health. As the chairman of an economic think tank and a physician respectively, we see a remarkable alignment between treatment regimens for sick economies and sick people. In both cases, it's important at some point to let the patient's immune system carry the load of recovery. Overtreatment is bad medicine.
Before the 1970s, our economy's "immune system" resided in financial institutions, especially banks and insurance companies. Companies looked to these institutions for capital that could restore growth and create jobs whenever the economy got sick. Beginning with the 1974-75 recession, however, capital markets took over the healing function; equity and bond markets provided the "antibodies" that corporate America could depend on to fight off the infection of recession.
Economies that lack the crucial immune-system component of a corporate bond market tend to suffer longer, deeper recessions. The most obvious case in point is Japan, whose banks struggled to recapitalize in the 1990s.
The Treasury's recent stress tests have again highlighted the capital needs of financial institutions-and it is time to let them fill their needs in the capital markets. The fact that non-investment-grade companies (Harrah's Entertainment, Warner Music Group, MGM Mirage, Rite Aid and Ford Motor Credit) are now paying down bank debt with funds raised in those markets shows the capacity of our financial immune system to help the economic patient recover.
Other similarities between human and economic medicine are revealing. Grave illness is often more life-threatening when it follows years of bad habits-overeating, drinking to excess, failing to exercise, and abusing substances that create dependence. The recent economic boom reflected a similar lack of discipline-overindulging on credit, leveraging assets to excess, failing to maintain enough equity in the capital structure, and disregarding the consequences of dependence on foreign oil.
When doctors tell patients to adopt healthier habits following a heart attack, the patients have no one to blame but themselves if they fail to comply. And when markets tell companies it's time to deleverage following an economic downturn, the companies have no one to blame but themselves if they fail to change their balance sheets.
Consider someone rushed into an emergency room in severe cardiac distress. After starting acute life-support measures, doctors still apply the rule stated by Galen of Pergamum more than 1,800 years ago: primum non nocere, or "First, do no harm." Treatment interventions are selected carefully from a battery of technologies and potent drugs while recognizing that any one of them, or a combination, could hurt the patient if misapplied or given in the wrong dosage. Economic interventions require no less care.
The attending physician makes a preliminary diagnosis: patient in shock; condition critical; blood not flowing through the body (low cardiac output). Last fall, the Treasury and the Fed diagnosed their patient: in shock; condition critical; money not flowing through the economy.
Priority one is to stabilize the patient using the "A/B/C" mnemonic- Airway/Breathing/Circulation. If necessary, provide oxygen through a respirator and stabilize the heart rhythm. When markets went into freefall, "A/B/C" was AIG/Banks/Credit markets. "Oxygen" included the Commercial Paper Funding Facility and other Federal Reserve tools. The Troubled Asset Relief Program was one of several Treasury interventions designed to stabilize the economy's rhythm.
With the patient stabilized, additional measures may be started: cardiac-performance stimulus, blood transfusions and antibiotics. Economic measures include the stimulus package and industry-bailout transfusions. Anticoagulants are sometimes used to prevent clots and help the body's peripheral circulation. The "anticoagulants" of Fed liquidity expansion, increased loan guarantees for small business, and a tax credit for first-time home buyers help the economy's peripheral circulation.
The intensive-care attending physician coordinates other specialists and creates a treatment plan. The goal is to keep all systems-heart, lungs, kidneys, brain-in balance. The optimal blood-pressure stimulus, for example, could impair the kidneys, which filter out toxic material.
When the economy was moved into intensive care following the Lehman Brothers failure last September, government officials coordinated other specialists and created a treatment plan. The goal was to keep all systems-capital markets, banks, insurers, GSEs-in balance. The optimal intervention with only one policy lever could impair the process of filtering out toxic assets.
Before leaving the hospital, a patient often gets a stress test to assess health, determine the right medication, and plan rehabilitation. Following their stress test, major financial institutions have started rehabilitation by going to the capital markets.
Some of the analogies we've drawn are a stretch. But here's one that matches perfectly: When the body begins to recover, doctors gradually withdraw external support and make sure the patient doesn't become addicted to medication.
Our economic doctors should permit America's uniquely effective immune system to take over as companies and financial institutions deleverage their balance sheets. With people and with capitalism, the tincture of time is often the best medicine.
Mr. Milken is chairman of the Milken Institute. Dr. Simons is president of the Prostate Cancer Foundation.
Friday, July 24, 2009
Cornyn will vote NO!!!!!!!!!!!!!!!!!!!!
Sen. Cornyn Statement On Nomination Of Judge Sotomayor
Friday, July 24, 2009
U.S. Sen. John Cornyn, R-Texas, a member of the Senate Judiciary Committee and former Texas Supreme Court Justice, today announced on the Senate floor his intention to vote against the nomination of Judge Sonia Sotomayor. Below are his floor remarks, as prepared for delivery.
Today I would like to address the nomination of Judge Sonia Sotomayor to be an Associate Justice of the Supreme Court of the United States.
The power to give our advice and consent on judicial nominees is one of the most solemn responsibilities delegated to the United States Senate in our Constitution. Supreme Court Justices have always had tremendous power within our constitutional system of separated and enumerated powers. Yet in recent decades, Supreme Court Justices have taken even more power away from the people's elected representatives - and imposed their own policy views through their judicial opinions.
We now see that five votes on the Court can invent new "rights" that aren't found in the Constitution - or narrow the scope of rights that generations of Americans have regarded as fundamental. Each Justice serves for life - so every time a nominee comes before us, we must exercise the power of advice and consent with great care.
Senators must exercise our powers with care - and with respect for each and every nominee. Sadly, over the last several decades, judicial nominees have not always been treated with respect. Some nominations have quickly become politicized. We have seen outrageous accusations to score political points with one constituency or another.
I remain deeply frustrated by the treatment of Miguel Estrada for the DC Court of Appeals. He was filibustered seven times and refused an up-or-down vote - because many Senators shared my view that - had he been confirmed - he could have been the first Hispanic nominated to serve on our nation's highest Court.
Instead, that honor goes to the nominee we have before us - Judge Sonia Sotomayor. From the beginning, I was determined that Judge Sotomayor's hearings would be different from many of those in the past.
When I first met her in June, I promised that she would receive a fair and respectful hearing. When individuals and organizations said or did things that cheapened the process, I said so. When supporters and opponents of Judge Sotomayor made accusations of racism, I repudiated them - because I believe that all such accusations are unfair, untrue and incompatible with a respectful and dignified consideration of her nomination.
In the end, I was pleased that Judge Sotomayor said that she couldn't have received fairer treatment during her hearing.
Fair treatment means neither pre-judging nor pre-confirming the nominee. Fair treatment means looking at Judge Sotomayor's record - as well as her public statements about the role of judging. Fair treatment means giving her the opportunity to explain her record and her statements - and put them in the appropriate context.
So going into the hearings - I found much to admire about Judge Sotomayor's record. She is an experienced judge with an excellent academic background. She has the temperament we expect from members of our highest court. And - for the most part - her decisions as a District Court judge and on the Second Court of Appeals were within the mainstream of American jurisprudence.
Yet going into the hearings, I also had questions that I felt she needed to answer. While her record was generally in the mainstream, several of her decisions demonstrated the kind of liberal judicial activism that has steered the court in the wrong direction over the last few years.
And many of her public statements reflected a surprisingly radical view of the law. Now, some have said that we can ignore her speeches - and just focus on her decisions as a judge. I disagree. Judges on our lower courts have less room to maneuver that those on the Supreme Court. Supreme Court Justices can more easily ignore precedents or reinterpret them. This is why Judge Sotomayor's speeches on judicial philosophy matter to me.
And those speeches contain very radical ideas on what the role of a judge is. In her speeches, she said: there is no objectivity in law; courts should change the law to make new policy; and ethnicity and gender can and even should impact a judge's decisionmaking.
I've served as a judge - and I strongly disagree with this view of the law and what the role of a judge should be. I believe in the rule of law, impartial justice and equal justice under the law.
Despite my concerns about some of her decisions - as well as many of her public statements about judging - I went into the hearings with an open mind. I felt she deserved the opportunity to explain how she approached some of the most controversial cases on which she ruled - and to put her public statements into context. I hoped that she would use the hearings to clear up the confusion that many of us had - about what kind of Justice she would be.
The hearings were an opportunity for Judge Sotomayor - and ultimately, in my view, a missed opportunity. Regarding her public statements about judging, I was surprised to hear her say that: She meant exactly the opposite of what she said. She had been misunderstood every single time. And that she doesn't really believe any of these radical ideas after all - her views on the law are right in line with Chief Justice John Roberts.
And regarding her most controversial decisions, she refused to explain them on the merits. She did not explain her legal reasoning or the constitutional arguments she found persuasive. She hid behind process arguments and judicial procedure whenever she could. She assured us her decisions were guided by precedent - even when many of her colleagues on the Second Circuit and a majority of the Supreme Court disagreed.
So at the end of the hearings, I found myself asking: will the real Judge Sotomayor please stand up?
Some have argued that if I am uncertain about what kind of Justice she'd be, I should vote to confirm Judge Sotomayor anyway. I disagree. Voting to confirm Judge Sotomayor - despite my doubts - would certainly be the politically expedient thing to do. But it would not be the right thing to do.
The future decisions of the Supreme Court will have great impact on all Americans. The Court could weaken the Second Amendment right of Americans to keep and bear arms. The Court could fail to protect the Fifth Amendment private property rights of our people from cities and states that want to condemn their property for non-public uses. The Court could invent new rights that appear nowhere in the Constitution - based on foreign law, a liberal social agenda or the latest intellectual fad.
The stakes are simply too high for me to confirm someone who could address all these issues from a liberal, activist perspective.
I will vote against confirmation of Judge Sotomayor to be an Associate Justice of the Supreme Court of the United States. I will vote with the certain knowledge that she will be confirmed despite my vote. I wish her well. I congratulate her on her historic achievement. I know she will be an inspiration to young people - within the Hispanic community and beyond.
And I hope she proves that my doubts are unfounded. The Justice she is replacing, after all, proved to have a far different impact on the Court than many of us anticipated. Perhaps Justice Sonia Sotomayor will surprise us all.
Kay Bailey Huthison with Astronauts Walt Cunningham and Alan Bean
Obama's Health Reform "Bargain" Puts Hospitals at Risk
by Senator Kay Bailey Hutchison
Published in Real Clear Politics July 20, 2009
An intense debate on how to reform our health care system is unfolding in the nation's Capitol. It is important that all American patients be aware of the devastating impact the proposed reforms could have on hospital systems throughout our state for both rural and big city hospitals.
Imagine a patient goes to the hospital for surgery to have a stent placed in his heart. Once there, he is told that the surgery will not occur unless he first donates a kidney. As shocking as this scenario is, it is not unlike the position many American hospitals will be placed in if the Obama Administration has its way.
Last week, the Administration announced that it struck a bargain to pay for health care reform, in part, by slashing federal reimbursements to hospitals. Without question, Americans want to see health care reform legislation enacted to improve access to health insurance and restrain runaway health care costs, but many of our hospitals are already on life support. Siphoning their funding would be disastrous for the millions of patients who rely on these facilities for care each year, and it could sink the hospitals to new and dangerous fiscal lows.
Our hospitals currently bear the financial burden of having to keep pace with increasingly expensive technological advancements; meanwhile, their federal reimbursements are shrinking at an alarming pace. Further, many hospitals are required to provide billions of dollars in uncompensated care to our 47 million uninsured residents. Despite this untenable financial dilemma facing our hospitals, the Obama Administration expects them to take further cuts in reimbursements on the hopes that the proposed government-run insurance provider would eventually lessen the number of Americans without insurance coverage.
In short, the Administration asked for an upfront investment by the hospitals and offered an IOU in return. But what the Administration is calling a "bargain" is actually a gamble with very high stakes - the health of entire communities. They are essentially gambling away health care access to achieve health care coverage.
Their so-called "bargain" ignores the unique challenges facing rural hospitals, which serve communities that are, per capita, older, sicker, and poorer. And due to the low number of patients, rural hospitals operate with little to no profit margin. Lowering these hospitals' badly needed federal reimbursements could result in reduced services, or even worse, the closure of entire facilities.
Another costly problem that has been entirely ignored by the Obama Administration is the uncompensated care hospitals provide to illegal immigrants each year. This is a huge challenge in my home state of Texas. Last year, 6,540 visits from undocumented immigrants cost Parkland Hospital System in Dallas $7 million, and Memorial Hermann in Houston incurred over $4 million in cost for their care. Border states are not alone in this dilemma. Hospitals in Connecticut, Delaware, Florida, Louisiana, Nevada, and other states have drawn 100 percent of the available federal aid to help defray the costs associated with providing care for illegal immigrants.
I have consistently championed federal efforts to offset these costs to hospitals and to prevent local and state taxpayers from having to shoulder the burden. However, the program has expired and the Administration and the Majority Leaders in Congress refuse to address this problem in health care reform. It will be impossible for some hospitals in Texas to remain operational if they are asked to carry an even heavier financial burden.
Patients should also be concerned that the cost of these proposed reimbursement cuts may actually be transferred to them. Hospitals may be forced to pass on these cuts to patients with private insurance, ultimately resulting in even higher premiums. A shrinking hospital budget must be filled in some way if the hospital is going to survive.
If our hospitals are placed in such peril that they can no longer afford to keep their doors open, who do you think will have to rescue them? Ultimately, this proposal leads us one step closer to a government takeover of the health care system. Over the last several months, we have seen the federal government seize control of Wall Street, the banking industry, the housing market, and the auto manufacturers. Can we really trust the health of Americans to a big government that is willing to take high stakes risks on the American health care system?
Wednesday, July 22, 2009
Senator Kay Bailey Hutchison- Kaycare
Focus on health care fundamentals
by Senators Kay Bailey Hutchison
Published in the Houston Chronicle July 14, 2009
Nearly everyone acknowledges that our health care system needs reform. We are particularly aware of this in Texas, which is a leading example of how our system isn't working for so many patients. Texas, unfortunately, has the highest percentage of people without health insurance coverage in the nation. In fact, at a whopping 6 million, the number of uninsured Texans is roughly the same as the entire population of the state of Wisconsin. This poses a huge challenge for our physicians, nurses and hospitals — and our taxpayers, who are paying the high costs of uncompensated care for the uninsured. Also affected are the working families who can't get the basic care they need because insurance is unaffordable and health care costs are soaring.
Something as sweeping and consequential as health care reform needs the right solution, not a politically expedient one. Many of the proposed fixes moving through Congress are misguided. While we need reform, we must take care not to undermine what should be the foundation of health care in America — patient choice, affordable coverage and the highest quality of care.
The Senate may soon consider legislation put forth by the Obama administration that solves little and creates a massive public health system. It will reduce patient choices, drive insurance companies out of business and have minimal impact on the uninsured population. It will cost taxpayers more than $600 billion and cut $400 billion out of doctor and hospital reimbursements in Medicare and Medicaid.
One of the most troublesome aspects of the legislation is the massive government expansion it would enact. A cornerstone of the plan is a government-run “option,” or a federal insurance provider that is intended to compete with private health care insurers. Proponents maintain that a government-run insurer could provide cheaper coverage for Americans. Despite initial statements that Americans who like their doctors and health care plans will get to keep them, the president recently acknowledged that if employers drop private coverage in favor of the government-run option, patients would have no choice but to switch the plans and lose access to the physicians that they have come to trust.
Furthermore, we must consider whether bureaucracy-run insurance is the best way to administer health care delivery. Government-managed entitlement programs like Medicare and Medicaid don't make a strong case for the “public option.” In fact, billions of taxpayer dollars are wasted on fraud and abuse in Medicare each year. The program pays out more than it takes in, and by 2017, it will be totally broke. Worse yet, there is little indication that Medicare beneficiaries enjoy the choices that administration officials would like us to think a government-run system offers. Today, 40 percent of physicians turn away Medicaid patients because the system is poorly administrated.
We can do better, and for the long-term health of Americans, we must do better. Any reforms must reduce costs and increase access — this will not be accomplished through a government takeover of our health care system.
The right approach must encourage competition that is based on transparency and value, making health insurance a buyers' market in which patients have affordable choices and know what plans cost and what they offer. The right approach will support employers and small businesses so they have affordable options to offer their employees and their families. The right approach would offer tax credits to those who buy individual policies. The right approach must prevent insured taxpayers from absorbing the costs of uncompensated care, which currently raises Texas families' insurance premiums by more than $1,500 annually. The right approach will allow Americans who are happy with their coverage to maintain the care they need with physicians they trust. And the right approach must actually accomplish the goal of removing barriers to medical care for all those who need it — including our 6 million uninsured in Texas. Anything that does not address those fundamental components will not fix the problem, and could actually make it worse.
With the health of millions of Americans in the balance, Congress cannot afford to get health care reform wrong.
Tuesday, July 21, 2009
Obamacare By Robert Reich
Sunday, July 19, 2009
Obamacare Is At War With Itself Over Future Costs
Right now, Obamacare is at war with itself. Political efforts to buy off Big Pharma, private insurers, and the AMA are all pushing up long-term costs -- one reason why Douglas Elmendorf, head of the Congressional Budget Office, told Congress late last week that "the cost curve is being raised." But this is setting off alarms among Blue Dog Democrats worried about future deficits -- and their votes are critical.
Big Pharma, for example, is in line to get just what it wants. The Senate health panel’s bill protects biotech companies from generic competition for 12 years after their drugs go to market, which is guaranteed to keep prices sky high. Meanwhile, legislation expected from the Senate Finance committee won't allow cheaper drugs to be imported from Canada and won't give the federal government the right to negotiate Medicare drug prices directly with pharmaceutical companies. Last month Big Pharma agreed to what the White House touted as $80 billion in givebacks to help pay for expanded health insurance, but so far there's been no mechanism to force the industry to keep its promise. No wonder Big Pharma is now running "Harry and Louise" ads -- the same couple who fifteen years ago scared Americans into thinking the Clinton plan would take away their choice of doctor -- now supportive of Obamacare.
Private insurers, for their part, have become convinced they'll make more money with a universal mandate accompanied by generous subsidies for families with earnings up to 400 percent of poverty (in excess of $80,000 of income) than they might stand to lose. Although still strongly opposed to a public option, the insurance industry is lining up behind much of the legislation. The biggest surprise is the AMA, which has also now come out in favor -- but only after being assurred that Medicare reimbursements won't be cut nearly as much as doctors first feared.
But all these industry giveaways are obviously causing the healthcare tab to grow. And as these long-term costs rise, the locus of opposition to universal health care is shifting away from industry and toward Blue Dog and moderate Democrats who are increasingly worried about future deficits. My sources on the Hill tell me there aren't enough votes in the House to get either major bill through, even with a provision that would pay for it with a surcharge on the richest 1 percent of taxpayers. House members don't want to vote for a tax increase before their Senate counterparts commit to one. Yet the Senate continues to be in suspended animation because Max Baucus and his Senate Finance Committee still haven't come up with a credible way of paying for health care. In his testimony last week, Elmendorf favored limiting tax-free employer-provided health benefits, but organized labor remains strongly opposed.
Obama has less than three weeks before August recess. Chances are dimming that he can get some form of universal health care passed in both Houses before the clock runs out. The Democratic National Committee is running ads favoring passage in Blue Dog states and districts, but that won't be enough. Now is the time for the President to begin twisting arms and knocking heads. To control long-term costs, he'll also have to take away some of the goodies that have been promised to the health-industrial complex, and maybe even cross Big Labor. He also needs to come out clearly and forcefully in favor of a way to pay for the whole thing -- ideally, in my view, a surtax on the top.
Monday, July 20, 2009
Sunday, July 19, 2009
Saturday, July 18, 2009
Monday, July 13, 2009
The Rich Must Help The Poor By Steve Hamm of Businessweek
Bill Gates: The Rich Must Help the Poor
Bill Gates has long been admired and listened to because of his great wealth; his ability to build one of the most successful companies ever, Microsoft (MSFT); and his contributions to the PC revolution. Now that he's spending most of his time as co-chairman of the Bill & Melinda Gates Foundation, he has a new role: shaping the world's thinking about how best to combat social problems.
On Jan. 26, Gate published his first annual progress report on the foundation's projects, and a call for action by governments and wealthy individuals to help address the global economic crisis. Fellow philanthropist (and Gates friend) Warren Buffett earned the nickname the Oracle of Omaha for the insights in his annual letter to Berkshire Hathaway's (BRKA) shareholders. If Gates wins anywhere near the same following, he may come to be known as the Sage of Seattle.
In his letter, Gates warns that the financial crisis will probably not pass in a year or two, but he expresses confidence that the problems will be behind us in five to 10 years. "A key reason for this is that innovation in every field—from software and materials science to genetics and energy generation—is moving forward at a pace that can bring real progress in solving big problems. These innovations will help improve the world and reinvigorate the world economy."
The Poorest Get Poorer
Gates amplified some of his themes during a Jan. 26 press conference, which was held in advance of a trip to the World Economic Forum in Davos, Switzerland, and to Nigeria, where he planned on pushing the battle against polio. "The people who suffer the most [from the economic crisis] are the poorest," Gates warned. At Davos, he said, he planned on thanking government and business leaders for increasing their contributions to global health and economic development over the past five years. But he said he would also urge them to keep up their commitments.
"The success we've had in meeting the needs of the poorest are easily lost," he said. "I want to make sure that people see this is concrete stuff: Lives are affected in a dramatic way."
Even though the Gates Foundation's endowment lost 20% of its value last year, Gates is increasing the amount of giving from $3.3 billion last year to $3.8 billion in 2009. As of Oct. 1, the endowment's total value stood at $35.1 billion. Most of the endowment comes from the Gates family, but Buffett pledged in 2006 to give 83% of his fortune to the foundation in a series of annual installments. He has already contributed about $5 billion.
By increasing his funding of projects, Gates aims to set an example for governments and individuals on how to respond in this time of crisis. He warns in his letter that the state and federal governments may be tempted to cut education budgets in the face of tax revenue shortfalls, but he urged them to hold the line. Gates commended the Obama Administration for its pledging to invest in improving public education. He also urges wealthy people to keep up their giving.
"Otherwise," he writes, "we will come out of the economic downturn in a world that is even more unequal, with greater inequities in health and education, and fewer opportunities for people to improve their lives."
Battling Disease
Gates writes that Buffett encouraged him to write an annual letter. His goal was to spell out the foundation's goals and to show where it has made progress and where it has not. Half of the foundation's annual program funding goes to disease suppression. Most of the rest goes to improving agriculture in Third World nations and to improving education for poor people in the U.S.
The programs that the foundation backs have made progress against some diseases, Gates writes, especially those that cause childhood deaths. But he says he's disappointed with the slow progress in coming up with effective and affordable AIDS vaccines. Gates admits that many of the investments the foundation has made in education haven't improved students' achievement in any significant way, but he says some charter schools achieved some notable successes. He urges state governments to permit more charter schools to be established and to increase their funding.
While the Gates Foundation is increasing its program investments this year, it doesn't plan to expand into new focus areas.
"I'm a believer that foundations in general work on too many causes," Gates said during the press conference. "If they worked on half as many causes and went deeper on a few things, the impacts would be greater."
Hamm is a senior writer for BusinessWeek in New York and author of the Globespotting blog.
Sunday, July 12, 2009
Gretchen Morgenson - The Most Important Financial Journalist In The World
BY STEPHEN KLING June 17 , 2009
On April 27, Lloyd Blankfein, chairman and chief executive of Goldman for a meeting at Goldman headquarters with Gretchen Morgenson, reporter, columnist and senior editor of the New York Times. The Wall Street titan and the Pulitzer Prize winner had never met, but this wasn't the usual polite getting-to-know-you session between reporter and source.
The Most Important Financial Journalist of Her Generation Journalists & Journalism
Dean Starkman: Long before most in the business press rose to the challenge, Gretchen Morgenson was reporting that the financial sector had gone rogue.
"I feel like I've been waterboarded," Blankfein told her, according to people familiar with the discussion. Blankfein was being dramatic, but he had reason to feel that way. It was Morgenson, after all, who had written the story this past fall that stripped the veil of secrecy from the most momentous closed-door deal in the annals of US finance: the government rescue of fallen insurance colossus American International Group. The September 28 story, "Behind Insurer's Crisis, a Blind Eye to a Web of Risk," was the first article published by a major news organization to reveal that the true beneficiaries of the bailout were the institutions to which AIG owed money, known as counterparties (mainly Wall Street investment banks). The 2,700-word piece said, among other things, that an AIG collapse "threatened to leave a hole of as much as $20 billion in Goldman's side" and that Blankfein attended a meeting at the Federal Reserve on September 15, the same day decisions were made to let Lehman Brothers fall and to save AIG.
Today this is common knowledge; until this story ran, though, it wasn't. The article was about as bold and valuable as business stories come and involved no small journalistic risks for the Times. Goldman, for instance, was able to wring a correction on the story and still feels wronged today. Treasury Secretary Timothy Geithner, who was then president of the Federal Reserve Bank of New York, called Morgenson and her editor to question the article's premise, The Nation has learned. The piece has been the subject of endless parsing on financial blogs and, privately, sniping by Morgenson's peers. Was Goldman really exposed to AIG? And if so, how? Was it fair to mention Blankfein's presence at the Fed?
It would be too much to say that the story was all in a day's work for Morgenson. It was extraordinary. But it does open a window onto what makes Morgenson the most important financial journalist of her generation.
At 53, Morgenson is at the height of her career, read and feared in the corridors of power running from Wall Street to Washington. As a reporter and columnist (a controversial dual role), she is enormously productive. During the period following Lehman's bankruptcy, her byline appeared on major stories on Henry Cisneros and good housing goals gone bad, Merrill Lynch's collapse, corrupted rating agencies and Washington Mutual's boiler-room culture, in addition to the September 28 blockbuster on AIG--not to mention weekly 1,200-word columns on everything from rating-agency hypocrisy ("They're Shocked, Shocked, About the Mess," October 26) to a convoluted tax deal that imperiled an Indiana electrical cooperative ("Just Call This Deal Hoosier Baroque," December 21).
She breaks business-press taboos constantly. Her prose is blunt; some even say crude. ("Everybody knows that executive compensation at many companies has been obscene. What everybody does not know is how obscene obscene is now," she wrote in February 2006 in a not untypical column.) Morgenson doesn't just cover subjects but sometimes hammers them into submission, as when she banged out more than three dozen stories on Countrywide in 2007 and 2008 and almost single-handedly made CEO Angelo Mozilo the face of a rogue industry. Not coincidentally, on June 4 the Securities and Exchange Commission charged Mozilo with securities fraud, alleging that he misled investors about the increasing risks Countrywide was taking with loans that Mozilo privately called "toxic."
At this point, it is almost impossible for business reporters and editors not to have an opinion about Morgenson. Supporters cheer her tell-it-like-it-is style; detractors call her simplistic and agenda-driven. In certain Wall Street and business circles, she is flatly detested.
"She rules," says Aaron Elstein, a senior writer who covers Wall Street for Crain's New York. "She grasped that the game was rigged way before it was fashionable to do so." (He was talking about bogus accounting practices, but the remark holds more generally.)
"Unreadable," snaps a business journalism peer. "She writes like an Escalade running into a concrete barrier. And her relentless and repetitious pounding of simplistic issues is maddening."
"The consensus view of her among actual business people I know is pure contempt," says Jim McCarthy of CounterPoint Strategies, a public relations firm that has represented high-profile business-press targets. "Her work has a sort of drive-by, potshot quality to it that leads to habitual mistakes and ideological laziness. She is reflexively opposed to free markets and assumes bad faith in almost every subject or person she examines."
What both sides miss, and what sets Morgenson apart, is that she combines the blunt writing style with a prodigious fact-gathering ability and an accountability mindset all too rare in the business-press culture. This allows her to go beyond merely reporting and commenting on the public agenda. She helps to set it.
For the public, the financial crisis has demonstrated the degree to which Morgenson matters. We've just experienced a long period of radical deregulation that touched off a sea change in the business culture and at the same time created an information vacuum. How was the public to know about Wall Street-backed predatory lending and the scale it had reached? Most of the business press ducked the challenge, sticking largely to tried-and-true formulas: personality profiles, scoops handed out by insiders and after-the-fact explanations of the latest corporate scandal. And while the press did publish some investor- and consumer-oriented stories about the housing bubble, defective mortgage products and the like, it was culturally incapable of grasping the big picture--that, for instance, the financial sector had gone rogue.
Morgenson got it then and gets it now. Ignoring the eye rolls of her peers, pushing back against the lawyers and the flacks, she aims her reporting straight at the heart of the matter--and in doing so points the way for a more credible business press. Many groaned, for instance, at her repeated pounding in recent years on excesses in executive compensation. But we now know that compensation lies at the center of today's crisis, since everyone from mortgage brokers to Wall Street executives was given incentives to sell financial products without regard for their quality. Similarly, what Morgenson saw as a fairness problem became a systemic one, since income distortions left a borrower class too strapped to repay consumer loans. More broadly, her tone of urgency and accountability gave the public the message it needed to hear: something in the system had gone deeply awry.
Morgenson made fairly strenuous efforts to talk me out of this profile, arguing variously that she wasn't the story, that others in the mortgage mess were far more significant, that attention might impair her effectiveness, etc. (As a thoughtful journalist, I of course blew all this off.) Waiting for her in a restaurant around the corner from her office at the Times, I'm more nervous than I expected to be. Not helping my sang-froid was the one-word description a friend at the Times offered of Morgenson's grimly focused demeanor in the newsroom: scary. She sweeps in--tall, blond hair well coiffed at shoulder length, blue eyes, carrying stuff, chattering apologies about being (two minutes) late--and I'm relieved and surprised to find how quickly it feels like I'm talking with an old friend. Over eggs and granola, she is chatty, even dishy and disarmingly open. At a certain point, though, I touch a nerve--something to do with her prerogatives at the Times, I think--and the chitchat ceases. Her eyes narrow and now seem icy as she stares across the table. I start to understand what it is like to face off against her.
But that's part of the formula. She has a lot of power for a business reporter, and she acts like it. When I ask, for instance, what she thinks of her former employer, Forbes--a question that would seem to call for some diplomacy--she says simply, "Awful. Terrible." Breaking a few more industry taboos, she then unfavorably compares current Forbes editor William Baldwin with his predecessor, the late Jim Michaels, one of her mentors.
"Jim Michaels had a knack for taking a small story and making it big," she says slyly. "Bill Baldwin has a knack for making a big story small."
(Baldwin, reached later, brushes off the slam. "Forbes has always been brusque in judgment and tough on people, and if you dish it out you have to learn to take it," he says.)
Still, plutocrats and liberals expecting or hoping to find a stern ideologue in Morgenson--or, really, sweeping views from her of any kind--will be disappointed. For one thing, many will be surprised to learn she's a moderate Republican. "I believe in capitalism," she says. "To me it's natural that I would go after the people who are wrecking it."
What becomes apparent over several conversations is that Morgenson is a business reporter--no more, no less. She's more likely to mention investors as her main concern than readers or "the public." Her views are pragmatic, sometimes small-bore to the point that her detail-laden writing can turn off casual readers. Her fixes are meliorative and not particularly original--better regulation, more competition. Her radical idea is, basically, that regulators should regulate, rating agencies should rate according to the merits of the credit, corporate compensation committees should set executive pay at arm's length, directors should look to the interests of shareholders first, large shareholders should act like the owners they are and mortgage lending should be something other than a game of three-card monte. That these views are seen as "antibusiness" in some circles tells us less about Morgenson than about the ethical breakdown among this generation's corporate elites.
"If you're going to believe this is an ownership society where you're going to take part in the upside, if you're going to participate in a sort of populist form of capitalism...you have to be confident that the agents have your best interests at heart," she says.
Morgenson was born in State College, Pennsylvania, the daughter of liberal parents. Her father was an academic psychologist who later taught at Wilfrid Laurier University (in Waterloo, Ontario), and her mother was a librarian. Her parents split when she was 10, and she moved with her mom to Oxford, Ohio.
Her ambition as a girl was to be a reporter for the New York Times. After graduating from her parents' alma mater (St. Olaf College, in Northfield, Minnesota), lacking contacts, training or much in the way of money, she nonetheless boarded a plane for New York City and eventually landed a job in journalism--as a secretary at Vogue reporting to, of course, a tyrannical editor. ("It was 'devil wears Prada,' totally," she says.) She later moved up to a low-level editorial job ("assistant slave," as she puts it), then began to write personal-finance columns. But at a salary of $10,000 a year, she found she couldn't afford her new profession and left for a better-paying job on Wall Street.
Her three years at Dean Witter (now part of Morgan Stanley) taught her a few things about the financial-services industry, none of them particularly edifying. For example, if the office squawk box in the morning announced an "overnight special" on some stock laden with incentives for the brokers, "you knew it would open lower," she says. Another lesson: "You can't trust your research department; that you learn pretty quickly." Her career, such as it was, lasted until mid-1983, when an early version of the tech bubble burst, costing some of her clients a lot of money. "I felt so terrible," she says. "I had this terrible guilt."
Retreating to the relative moral high ground of journalism, she cadged a six-month trial at Money magazine and eventually a job at Forbes, then known for its hard-hitting business investigations. She rose quickly, learning at the feet of Michaels, the magazine's defining personality and editor from 1961 to 1999. A taskmaster (he could be "nasty, frightening," she recalls), Michaels stressed the importance of assembling an armada of facts in reporting and cutting to the chase in writing. Don't leave it to the reader to sort it out, he preached.
It was under Michaels that Morgenson became Morgenson, rattling off a series of investigative coups. A 1993 bombshell that found the entire Nasdaq trading system was tilted to favor stockbrokers over investors led to a historic $1 billion antitrust settlement with Wall Street firms. Another Forbes story took aim at the mid-1990s euphoria surrounding "boiler rooms"--registered and licensed small brokerages that were in fact criminal enterprises. The firms cold-called and bamboozled thousands of people into investing in plausible-sounding tiny public companies the brokerages secretly controlled. And while all business publications covered the resulting criminal cases, only Morgenson traced the frauds of one particularly malignant firm, A.R. Baron & Company, to its financial backer and back-office services provider: Bear Stearns.
The story detailed an intimate relationship between a criminal enterprise and a Wall Street bank, including unheeded letters from frantic investors pleading with Bear to cancel trades they had never authorized. The piece, incredibly, also traced the relationship between Baron principal Andrew Bressman and Richard Harriton, a top Bear official. Bear later agreed to pay $38 million (and got off incredibly easy) to settle charges brought by the SEC and the Manhattan district attorney, Robert Morgenthau. Harriton agreed to pay $1 million and was barred from the business.
The business press generally goes to great lengths to avoid this kind of straightforward investigative reporting, which is why Morgenson's approach has been so badly needed in recent years. After all, the mortgage crisis was nothing if not the Bear/Baron model writ large. It is generally conceded today that Ameriquest, Countrywide, Washington Mutual, Citigroup--all the brand names, in fact--were running boiler rooms underwritten and incentivized by Bear, Lehman, Merrill Lynch and the Wall Street securitization machine. The business press did not cover it then and still hasn't gotten its arms around this phenomenon. If readers are wondering why they were surprised by the mortgage crisis, this is the reason.
Morgenson arrived at the Times in 1998, an ascension that brought an investigative, accountability-oriented sensibility to a highly visible outpost. Reading through years of her work in one sitting isn't an entirely pleasurable experience--it can feel like you're being pummeled by a sock filled with wet sand. But even so, a reader is struck by her mastery of technical details, the force of her prose and, mostly, the underlying insistence that capitalism be made to work for everyone, not just the big shots. Her work in the run-up to the tech bubble was characteristically skeptical and investor oriented. Common causes of columns and stories include, besides compensation reform: shareholder rights; effective corporate governance; nonrigged arbitrations; anti-gouging; full disclosure in consumer lending; and fairness in bankruptcy, foreclosure and other legal proceedings. Her 2002 Pulitzer Prize for Beat Reporting was officially awarded for stories that plumbed bogus Wall Street stock research and the dangers of off-balance-sheet financing. But in an era of spectacular business corruption (Enron, WorldCom, etc.), I suspect the Pulitzer judges, who were not business news specialists, also appreciated her confrontational approach.
Not everyone does, of course. A handful of bloggers, including the late Doris Dungey (known as Tanta) of Calculated Risk and University of Illinois law professor Larry Ribstein, have created large bodies of work debunking and mocking her and picking her apart. Ribstein, who calls her Morgenscreed, particularly objects to the Times allowing her to write both an opinion column ("Fair Game") and straight news, sometimes on the same subjects. In a column last November, the Times's public editor, Clark Hoyt, tut-tutted the paper for the practice (Andrew Ross Sorkin, among others, is also allowed the dual platform) but not very convincingly. The critiques, most centering on Morgenson's alleged oversimplications, come across as arguments about wallpaper design in a burning house. Bloggers, for instance, hit the roof over a Morgenson column last September arguing that the newly nationalized Fannie Mae and Freddie Mac should be made to disclose details about the individual mortgages they'd bought or guaranteed in the past decade. Ribstein found the idea an example of her "extreme idiocy." Others would wonder what's wrong with it.
In the Times's famously baroque culture, some people are known to have power, and others aren't. Morgenson has it. She's not known as a shmoozer but as one of the most efficient staffers at the paper: in at 9:30; out, incredibly, around 6. And while she's a cheerful and cooperative colleague by all accounts--helping out younger staffers, waiting her turn at the salad bar, etc.--she doesn't hesitate to assert her undefined but very real prerogatives. Editors ask her questions and make suggestions. They don't give orders.
The downside, according to a midlevel editor, is that Morgenson is not particularly open to nuance or different points of view. This person says the system can lead to a kind of orthodoxy and groupthink that deadens reporting. Morgenson's views on executive compensation, for instance, are hardly out of step with the "way people think" around the Times, the person notes.
That said, her clout has its limits. In 2003 the Times business section was getting an overhaul. Its editor, Glenn Kramon, was moving up and out. Jockeying began for a successor, with internal candidates including Jim Schachter, now editor of digital initiatives at the paper, and Winnie O'Kelley, a business editor with whom Morgenson has been particularly close.
Instead, executive editor Bill Keller chose Lawrence Ingrassia, who had run the Wall Street Journal's "Money & Investing" section. While many believed Ingrassia had breathed life into a stale operation, some at the Times viewed him (unfairly, in my view) as a cheerleader for the tech bubble, mainly because of his frequent appearances on CNBC during the late '90s. Some also believed he didn't "get" the investigative, accountability-oriented journalism Morgenson practices, favoring instead the kind that depends on access to power.
When Keller asked Morgenson about hiring Ingrassia, according to people with knowledge of the conversation, she told him flatly that it was a bad idea. But she also promised to make it work. (Keller, through a Times spokeswoman, declined to comment.) For his part, Ingrassia, now 57, has nothing but praise for Morgenson. "She knows Wall Street and how it works better than any reporter I've seen," he says. "She has great sources, and she's passionate. She cares deeply about making sure that individual investors are treated fairly. Basically, she believes people in positions of responsibility should act responsibly." Ingrassia said he and Morgenson have "quite a good working relationship, now."
Says Morgenson, turning cautious and speaking slowly: "Larry Ingrassia has been extremely supportive of my work this year."
However one parses all that, few would argue that the business section has not dramatically improved in recent years. Despite a relatively small staff (the Times has about 110 business journalists; the Journal, about 700), it is reasonably competitive on major stories and has assembled a cadre of reporters capable of strong investigative work, including Diana Henriques, Charles Duhigg, Vikas Bajaj, Louis Uchitelle, Stephen Labaton, Louise Story and Peter Goodman, supplemented by Jo Becker of the investigative staff.
Morgenson, Ingrassia and the Times business staff have produced some of the best coverage of the crisis, particularly the "Reckoning" series at the end of last year, which included exposés on major themes: the predatory practices at Countrywide, Washington Mutual and other brand names; compromised regulation; skewed compensation incentives; even the role played by the person in charge of the regulatory system, George W. Bush. The paper's news coverage has been complemented by strong editorials, many written by Teresa Tritch, a former staffer at Money.
Morgenson's approach has obviously been vindicated by the crisis, and she continues to help steer the public agenda. A story in April (with Becker as the lead byline) deftly revealed Timothy Geithner's longstanding social and professional ties to some of the leading culprits in the financial mess, including Robert Rubin (a longtime mentor), Sanford Weill (who, the story revealed, pushed Geithner to head Citigroup) and executives at money manager BlackRock (which got a no-bid bailout contract from Geithner's New York Fed). A June 1 story peeled back Wall Street lobbying efforts to dilute the regulation of derivatives, and unearthed a key lobbyist's memo that has helped shape the Obama administration's policy-making.
Like newspaper crusaders of old, Morgenson has sided with the little guy over the big guy, revealing, for instance, that Countrywide's predations continued even after its borrowers had filed for bankruptcy. A series in 2007 and last year reported that the lender had destroyed or "lost" $500,000 in homeowners' mortgage payments, then imposed additional penalties and fees, and presented to the court "re-created" letters that had never been mailed to homeowners.
"It's really about fairness," Morgenson says. "It just seems that the playing field is so skewed in some cases that it's worthwhile to educate people to level the playing field a little bit."
A little-understood aspect of Morgenson's approach is that she avoids a business-press tendency toward over-sophistication and goes after the big, honking story, the kind that rings alarm bells in executive suites.
Take the AIG/Goldman story. It came a mere two weeks after the bailout was announced, with the public still baffled as to why an insurance company would suddenly require scores of billions from the government. It also involved clashing with Wall Street's most powerful firm on the crux of a vital matter of public policy. (Disclosure: Goldman is a funder of Columbia Journalism Review's business section, "The Audit," which I run.)
Today, Lucas van Praag, a Goldman spokesman, says the story was "really very unfair" and that the now-corrected error, which mistakenly placed Blankfein in the same meeting with his predecessor, then-Treasury Secretary Henry Paulson, set off damaging conspiracy theories. (Tim O'Brien, one of Morgenson's editors, who got the original tip for the story, takes the blame for the error.)
Goldman, which adamantly contested Morgenson's premise that it had been exposed to AIG's failure, received support from a surprising quarter: Geithner, who called Morgenson on her cellphone the day the story ran, a Sunday.
"I think they were fully hedged," he told her, according to people familiar with the call. Translation: Goldman had no exposure because it had bought insurance from third parties.
"Do you know who the counterparties were?" she snapped back. Translation: are you sure, and have you checked? He conceded he hadn't, the people said. Geithner made a similar call to Ingrassia, people familiar with that call said. (A spokesman for Geithner declined to comment.)
The dispute continues. Goldman officials have repeated that Goldman's exposure to AIG was "not material," in effect disputing Morgenson's premise. The meeting between Blankfein and Morgenson in April did not resolve the question.
But even conceding Goldman's main point--that $10 billion was covered at the time of the bailout--the bank still had another $10 billion exposed, the value of which easily could have, and probably would have, plummeted absent a bailout. One could argue that with Goldman's immediate exposure covered, the AIG bailout didn't benefit Goldman directly and that Goldman benefited no more than other banks. But the AIG bailout clearly mattered to Goldman--and would come to matter more as additional bailout funds flowed to the bank, totaling $12.9 billion. The Times stands by the story, and the story stands.
In one of our later interviews, Morgenson remarks that such chronicling has shaken her belief in capitalism "to the core." But one comes away unconvinced. She was a skeptic in the first place, after all, and doesn't put much faith in government either. "It's scarier than what Wall Street was doing," she says. "The secrecy, doing an end run around Congress, tripling the size of the Fed's balance sheet."
So capitalism is the world's worst system except for all the others? "You need it," she says firmly. "But it must have a counterbalance, and that counterbalance must be tough regulation--and a very forthright media."
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