Go down the S&P 500 list and ask any CEO, where is the Magna Carta in their corporate charters for “the freedom of speech that was the right of Englishmen”? (Citizens United v. Federal Election Commission, Supreme Court of the United States, 129 S. Ct. 2893 on June 29, 2009) Corporate governance is no more democratic than “Gulag Archipelago”. So far from representative democracy in governance, “association in the corporate form” is a socially engineered species very much like the Soviet Union with:
A high command;
Committees all over the place; and
Blind faith in the righteousness of Manifest Destiny.
With no more transparency than Soviet citizens got from Pravda (Truth) and Izvestia (News), annual voting proxies are mailed to corporate shareholders soliciting their endorsements of the party line. Whoever demands a loyalty oath to these children of a lesser god, Stalin also had a fan club willing to believe that pigs can fly. For those savvy enough to trust their noses, though, a rose by any other name still grows on a thorn bush.
Teaching to a USSR test, palace intrigue packed a punch with do or die. The Red Army never caught an empty bonus envelope for too much swashbuckling. Although the Soviets believed that their system was ordained by history to inherit the wind, it was “a tale told by an idiot, full of sound and fury, signifying nothing.” (William Shakespeare, “Macbeth”, Act 5, Scene 5.)
CAPTAIN OF THE TITANIC
This is a test that “association in the corporate form” would probably ace. Following the take-over by Charlotte, North Carolina based NationsBank, Kenneth D. “Ken” Lewis became CEO, President and Chairman of Bank of America (BAC) in 2001. Lewis announced on January 11, 2008, that Bank of America was going to buy Countrywide Financial for $4 billion, because it was a “rare opportunity” for the company (“BofA Inks Deal to Buy Countrywide for $4 billion” by David Ellis in CNNMoney on January 11, 2008). The acquisition has since been characterized as the worst deal in the history of American finance, with a total cost that might exceed $40 billion due to Countrywide’s real-estate losses, legal expenses and settlements with state and federal agencies (“Bank of America’s $40 Billion Mistake” by Dan Fitzpatrick in The Wall Street Journal on July 1, 2012)
During the darkest hours of 2008, Lewis also acquired Merrill Lynch for $50 billion. Federal Deposit Insurance Corporation Chairwoman at the time, Sheila Bair, warned that the acquisition was overpriced, because Merrill Lynch along with Countrywide Financial, “were two of the sickest financial institutions in the country”. (“What Sheila Bair Really Thinks About Wall Street’s CEOs” in The Wall Street Journal on September 25, 2012). In its January 16, 2009 report card, Bank of America disclosed massive losses at Merrill Lynch, which required $20 billion from the federal government to keep the lights from going out in North Carolina. (“Bank of America Withheld Loss Figures Ahead of Merrill Vote” by Gretchen Morgenson in The New York Times on June 3, 2012). Merrill posted an operating loss of $21.5 billion in the quarter.
In November of 2008, at a time when BAC had to borrow $86 billion from the Fed, Lewis wrote shareholders to assure them that he was at the helm of “one of the strongest and most stable banks in the world” (“Bank of America Chief to Depart at Year’s End” by Louise Story and Eric Dash in The New York Times on September 30, 2009). For his swash buckling, “Pirates of the Caribbean” (BAC’s Compensation Committee) put $32,171,000 in the treasure chest for Kenneth D. Lewis – like the captain of the Titanic wouldn’t have done a better job rearranging the deck chairs – and Bank of America rewarded him in 2009 with more than $135 million in retirement benefits.
BAC common stock closed the year ending 2012 at $11.61, having given 10 year shareholders – under his stewardship – a haircut equivalent to two-thirds of its $34.79 close in 2002 on the NYSE.
Exactly which Englishman in this documentary exercised “the freedom to speak in association with other individuals, including association in the corporate form”? (Citizens United v. Federal Election Commission)
Was it the hired hand helping himself to BAC’s crown jewels for a king’s ransom worth of financial institution de-regulation in compensation for sailing the corporate ship into an ice berg?
Or was it rather the full scale euthanasia of shareholder democracy “in the corporate form”, with hired guns bringing shareholders frontier justice to (Merrill) lynch the rule of law?
There is “in the world of economic organization…a more complicated and realistic version of the firm in which ownership is separated from managerial control.” (“The Politics of Structural Choice: Toward a Theory of Public Bureaucracy” by Terry M. Moe in Organization Theory From Chester Bernard to the Present and Beyond, Oxford University Press, 1995) “[I]t arises out of contractual agreements among individuals. They agree to a set of rules, typically including a set of authority relationships, to impose a mutually beneficial order on their future exchanges with one another…[T]he firm is understood as a governance structure…[A]gents have their own interests to pursue, and they will do what is best for us only if it is best for them…What appears on the surface to be a good job may be nothing of the kind. This is the ‘moral hazard’ problem”.
“Silence of the Lambs” symbolizes more than the spontaneous combustion of corporate equity in a derivative for the U.S. economy through the proxy of America’s biggest commercial bank. Since slashing its workforce by 42,500 in 2008 (“11 Firms That Overdid the Layoffs” by Rick Newman in US News & World Report on September 17, 2010), another 17,800 jobs were sent last year to the economic body bagger for burial with BAC’s red ink on their pink slips. (“Wall Street’s Big Banks Are Gearing Up For More Layoffs” by Maureen Farrell in CNNMoney on January 15, 2013) So far from a foreign slack attack on U.S. domestic employment, this is how “the concentration of income at the very top of the distribution rose to levels last seen more than 80 years ago” while income growth for households in the middle and lower parts of the distribution slowed sharply”. (“A Guide to Statistics on Historical Trends in Income Inequality” by Chad Stone, Danilo Trisi, and Arloc Sherman, revised on October 23, 2012 for the Center on Budget and Policy Priorities) “The fault, dear Brutus, is not in our stars, but in ourselves, that we are underlings.” (William Shakespeare, “Julius Cæsar”, Act 1, Scene 2.)
What ulterior motives bob and weave around an inquest into culpability for this kind of carnage behind a façade of intellectual pieties? How many $billions of BAC’s deposits did financial institution deregulation drain from its capital for commercial lending in order to subsidize the manifest destiny of what’s mine is mine and what’s yours is also mine?
Put aside the partisanship just long enough to ask exactly who’s pulling Congressional puppet strings to keep the token in the rule of law? The finance, real estate, and insurance industries reportedly spent a collective $6.8 billion from 1998 through 2011, far more than any other lobbying sector (“Auction 2012: How The Bank Lobby Owns Washington” by Dan Froomkin and Paul Blumenthal in The Huffington Post on January 30, 2012). Imagine if this kind of money had lobbied the “Federalist Papers”. We could have the seven deadly sins for a Bill of Rights. Without open palms, there would be no corruption. Pushing whatever partisan buttons get them elected to office, with too few exceptions, the rule is all for one and every man for himself. “The evil that men do lives after them; the good is oft interred with their bones.” (William Shakespeare, “Julius Cæsar”, Act 3, Scene 2.)
“Political consulting is often thought of as an offshoot of the advertising industry, but closer to the truth is that the advertising industry began as a form of political consulting…When modern advertising began, the big clients were just as interested in advancing a political agenda as a commercial one. Monopolies like Standard Oil and DuPont looked bad: they looked greedy and ruthless…They therefore hired advertising firms to sell the public on the idea of the large corporation, and, not incidentally, to advance pro-business legislation.” (“The Lie Factory: How Politics Became a Business” by Jill Lepore in The New Yorker published on September 24, 2012)
BLIND FAITH IN MANIFEST DESTINY
For all of the money, power and influence peddling at the command of “association in the corporate form”, it is a species more than anything else like the Central Committee of the Communist Party of the Soviet Union. Shielded by the corporate veil from any personal liability, whoever ascends to the rank of “Wizard of Oz” submits only to the proxy of yet other insular children of a lesser god. Corporate shares of ownership – to institutional investors – are nothing more than chips to be played in the casino on Wall Street. Taking liberties with truth, in forcing facts to fit a legal theory or political agenda, is a species of intellectual dishonesty.
No way were corporate and institutional avatars “endowed by [Nature’s] Creator with certain unalienable rights”. If you see pigs flying, it’s because you’re in “Emerald City” (or Moscow). No matter the judicial intentions, it is a cheapening (monetization) of unalienable human rights. It is also a compromise of Constitutional freedoms that’s now come back to bite us in a place, where the sun don’t shine.
“There is a tide in the affairs of men. Which, taken at the flood, leads on to fortune; Omitted, all the voyage of their life Is bound in shallows and in miseries. On such a full sea are we now afloat, And we must take the current when it serves, Or lose our ventures.” (William Shakespeare, “Julius Cæsar”, Act 4, Scene 3.)
- Citizens United v. Federal Election Commission, Supreme Court of the United States, 129 S. Ct. 2893 on June 29, 2009.
- “BofA Inks Deal to Buy Countrywide for $4 billion” by David Ellis in CNNMoney on January 11, 2008.
- “What Sheila Bair Really Thinks About Wall Street’s CEOs” in The Wall Street Journal on September 25, 2012.
- “Bank of America’s $40 Billion Mistake” by Dan Fitzpatrick in The Wall Street Journal on July 1, 2012.
- “Bank of America Withheld Loss Figures Ahead of Merrill Vote” by Gretchen Morgenson in The New York Times on June 3, 2012.
- “Bank of America Chief to Depart at Year’s End” by Louise Story and Eric Dash in The New York Times on September 30, 2009.
- “The Politics of Structural Choice: Toward a Theory of Public Bureaucracy” by Terry M. Moe in Organization Theory From Chester Bernard to the Present and Beyond, Oxford University Press, 1995.
- “11 Firms That Overdid the Layoffs” by Rick Newman in US News & World Report on September 17, 2010.
- “Wall Street’s Big Banks Are Gearing Up For More Layoffs” by Maureen Farrell in CNNMoney on January 15, 2013.
- “A Guide to Statistics on Historical Trends in Income Inequality” by Chad Stone, Danilo Trisi, and Arloc Sherman, revised on October 23, 2012 for the Center on Budget and Policy Priorities.
- “Auction 2012: How The Bank Lobby Owns Washington” by Dan Froomkin and Paul Blumenthal in The Huffington Post on January 30, 2012.
- “The Lie Factory: How Politics Became a Business” by Jill Lepore in The New Yorker published on September 24, 2012.
ART & PHOTO REFERENCES
- “What’s Mine Is Mine and What’s Yours Is Also Mine”: http://arsiyah-dream.blogspot.com.
- “Pirates of the Caribbean”: http://www.secretsofsurvival.com.
- “Am I My Brother’s Keeper?”: http://colourthysoul.tumblr.com.