The news lately has been an orgy of blame-gaming people parading themselves in front of cameras in hopes of some measure of ass covering. The populists have shouted their claims from on high as well. "BP should be seized!" "President Obama isn't doing enough!" "The regulation failed!"
Progressives are quick to point out that the shady deals that lead to BP having a permit came under the Bush administration. Look folks, I enjoy a good session of Bush bashing (all sex jokes aside) as much as the next person. But the fact remains, his presidency, mercifully, is over. It's time to move on and get from blaming to fixing.
Or perhaps you prefer the stories about BP's, *cough*, spotty safety record. If it weren't for the lives, land, and wildlife ruined from this spill, it would be almost comical that BP had 760 major safety violations. Compare that to Exxon, once themselves the bane of environmentalists (Valdez anyone??), which had only 1.
Here's the truly troubling thing though: this oil spill is quite similar to the economic collapse. In both instances there were warning signs. In both instances there were regulators who "failed to see" the coming crash. In both instances it is nearly impossible to look back and see how they missed the impending disaster. In the case of the financial collapse, investors and regulators were shocked to see that if you give $500,000 loans to people making $50,000/yr with little or no positive credit history, they may default on those loans. Those defaults are bad for communities and drive home prices down. Shocking indeed...
In the case of the oil spill, regulators with the Minerals Management Service didn't think that BP not having a plan to deal with an oil spill was a problem. Then when the oil spill happened...well momma used to always say it was impolite to point fingers.
In both cases there seems to be plenty of blame to go around, and plenty of better writers to tell you who you should blame. The question that nags, though, is "why do regulators seem to suck at their jobs?"
The rationale behind regulation is that businesses will not always be ethical in their pursuit of profit. If you need to sit down, I understand. These things are very surprising. The classic example is the Great Depression. When people got scared due to the stock market crashing and went to the bank to get their money, they found there wasn't any money. That money had been spent already, and the resulting debt was hidden in shadow corporations that didn't actually exist. Oops. So laws were passed that regulated the amount of cash banks had to have on-hand with respect to their deposits and investments. Also, the Federal Deposit Insurance Corp (FDIC) was founded that "guaranteed" most deposits that people made. Simple concept: there was a failure in the system and the government built a fix.
So why the major failures recently? Progressives say it's due to the de-regulation under President Reagan and subsequent presidents. While there may be some truth in this, the fact remains that there was an agency designed to regulate deepwater drilling in the Gulf. That agency failed. It wasn't that President Reagan, disagree with him though I may, removed the regulator's power. It was that the regulators failed.
No, the real root problem is that regulators, who are often industry insiders, have tremendous freedom and power to make the rules governing their industry. By now, many Americans are familiar with the fact that Former Secretary of Treasury Hank Paulson was also a former CEO of Goldman Sachs. Bullshit Hank (may not be catchy, but is certainly appropriate) then sold a group of idiots in Congress on the idea of floating a huge loan to banks without any oversight into how those funds were spent. Suddenly banks were extremely profitable again, and we were not. Suggestions that banks like Goldman Sachs used TARP money to buy treasury bonds (essentially using our own money to make us pay them more money) are rampant, but Bullshit Hank did a decent job of preventing us from ever knowing how most of that money was spent.
In the case of the oil spill, regulators accepted gifts and even allowed the oil companies to fill out their own compliance forms. They had to see those safety violations. They had to know it wasn't a good idea to allow drilling under circumstances for which there was no plan to deal with a spill. But they didn't act.
Indeed the new financial reform bill, while well intended, makes these same mistakes. For example, it creates a "Consumer Watchdog" agency with the authority to protect us from the evils of banks. Sounds like a great idea, but mostly is just created because Congress thinks that giving something a stupid name like "Consumer Watchdog" will distract you from the fact that this is not better than what we have. Yes it will have the authority to do lots of things...mostly things that some other agency already has the authority to do. The problem isn't authority, the problem is a lack of action.
If Congress wants to really fix regulatory problems in this country, it has to remove much of the rule writing power of regulators. Those regulations need to be in law passed by Congress and signed by the President. Law allows criminal charges to be brought. It allows asses to be thrown in prison. Presidents promising change can't nominate people like Tim "I don't pay my taxes" Geitner to the Secretary of Treasury and then expect a new era of trust and transparency.
There needs to be a fundamental change in how people are selected and nominated to these positions. It doesn't insulate corruption from the system...of course not. But it does give us more power to fight these destructive bastards in criminal court. I just hope that someone on capital hill will soon look over their fat bellies and remember that they have balls. Then I hope they use them.
The Blog Moves On
7 years ago
