Loose Ends... Vol. LXI

Earlier this week, the House convened and voted upon H. Res. 744:

Whereas on September 9, 2009, during the joint session of Congress convened pursuant to House Concurrent Resolution 179, the President of the United States, speaking at the invitation of the House and Senate, had his remarks interrupted by the Representative from South Carolina, Mr. Wilson; and

Whereas the conduct of the Representative from South Carolina was a breach of decorum and degraded the proceedings of the joint session, to the discredit of the House: Now, therefore, be it

Resolved, That the House of Representatives disapproves of the behavior of the Representative from South Carolina, Mr. Wilson, during the joint session of Congress held on September 9, 2009.

The resolution passed 240-179 (10 not voting and 5 Democrats voting "present"). I don't have a fundamental problem with this resolution. Wilson (R-SC) was clearly out-of-line with his now infamous "You lie!" outburst during Obama's speech before the joint session of Congress.

However, having now followed Congressional proceeding more carefully over the last year or so, I recognize how difficult it is to bring bills and resolutions before the House floor for a vote. I think the members of the House could have spent their time on far better things this week.

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Former President Jimmy Carter then took the "You Lie" sideshow to a new level when he declared, "an overwhelming portion of the intensely demonstrated animosity toward President Barack Obama is based on the fact that he is a black man."

There is no doubt that racism still exists. It will always exist. We can parse Carter's words or recognize his historical perspective, but this just heightens an already vitriolic level of discourse in today's political debate. Nancy Pelosi (D-CA) did not help the situation by suggesting a parallel between today's rhetoric and that in San Francisco in the time of the murders of San Francisco politicians Harvey Milk and George Moscone.

It's all really a shame. There is so much opportunity for healthy and intelligent debate on the issues we face. Unfortunately, our political system and the mediatainment business both encourage trivialities, name-calling, gotcha politics, and the perpetuation of the two-party duopoly.

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Early this week marked the one year anniversary of the collapse of Lehman Brothers. We've seen a lot of ups and downs in the markets, a deepening recession, and (potentially) a technical recovery since that time. I've spent a lot of time reading and learning more about finance and economics. My general thesis for some time is that we will experience both inflation and deflation simultaneously in the future. More on this in a future article, but in the meantime, I'd recommend reading Steve Keen at Debtwatch.

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One last piece of financial news... on August 3, the SEC charged Bank of America "for misleading investors about billions of dollars of bonuses that were being paid to Merrill Lynch & Co. executives" when the government helped engineer BoA's acquisition of ML. BoA immediately agreed to settle for $30M. The SEC's press release can be read here.

Noting that the shareholders who were allegedly misled by Bank of America ultimately share the pain of a $30M payout, Judge Jed Rakoff stated:

It is not fair, first and foremost, because it does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the Bank's alleged misconduct now pay the penalty for that misconduct... the S.E.C. argues that this is justified because "[a] corporate penalty... sends a strong signal to shareholders that unsatisfactory corporate conduct has occurred and allows shareholders to better assess the quality and performance of management." ... [which] makes no sense when applied to the facts here... [it] is absurd.

The entire order can be read here. This is, in my opinion, an important ruling where the Judicial Branch is stepping in regarding the ridiculous Wall Street pandering of the Executive Branch. New York Attorney General Andrew Cuomo has been pursuing a suit against BoA executive on this and related matters of failures to disclose material information to shareholders. Cuomo's office sent a letter to BoA on September 8 - no new developments yet.

This could all lead to penalties against Ken Lewis and other BoA executives. It may also extend to Henry Paulson, Ben Bernanke and Tim Geithner as they were all involved in the acquisition of Merrill. Recall this article.