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Americans across the nation are voicing their anger at Wall Street, in particular against AIG as President Obama is waging a battle for the support of the nation to make changes in the way Wall Street executives conduct themselves.
The most outrageous situation facing Americans is that "the reality is that no matter what we do now, tens of trillions of dollars in wealth have been lost. All that's left is simply an elaborate exercise in settling up the accounts."
What angers Americans the most is "that the hundreds of billion dollars of taxpayer funds that have been put at risk to keep AIG and Citi from failing and taking the whole financial system down with them."
The only useful purpose all of this public anger is having is that it is helping to let off some collective pessure that has building for years on the way Wal Street has been conducting it's business practices. It also aids in the coalesce of political pressure for reform of the political checks and balances that keep Wall Streters in check. And with the renewed call for stricter regulations comes the hope that in the future Wall Street finaciers will be forced to "think long and hard the next time they get the urge to take excessive risks with other people's money."
One of the most tangible forms of protest being waged by angry American took shape on Capitol Hill today when House members decisively authorized "a near total tax on bonuses paid this year to employees of the American International Group and other firms that have accepted large amounts of federal bailout funds, rattling Wall Street as lawmakers rushed to respond to populist anger."P
Angry Democrats and Republicans authorized a nearly 90% tax "on bonuses for traders, executives and bankers earning more than $250,000."
The hast to restrain the bonuses by Housemembers who have waged vigorous battles over the limitation of compensation for Wall Street executives, demonstrates the high degree of tension being brought to bear by the bailout. On the Senate side, lawmakers are expected to consider a tax on executive bonuses that will differ with the measure passed by the House, which will effect final pasage of the bill.
President Obama urged congressional members to come up with a “final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated.”
In a cautious and measured response, President Obama Mr. Obama said he believed legislators were “responding, I think, to everybody’s anger” but that the best way to handle the situation was “to make sure you’ve closed the door before the horse gets out of the barn.”P
Members of Congress voiced their displeasure in terse statements: “As A.I.G.’s recent actions remind us, it is unconscionable that companies dependent upon the largess of the federal government for their very existence should in turn pay irresponsibly exorbitant bonuses to the rapscallions partially responsible for the current recession,” Representative John D. Dingell, Democrat of Michigan, said.
Wall Street executives called the legislative actions reckless and ill-conceived. And many bank executives threatened to pull out from efforts to right the nation's economy.
Even senior Republican leaders backed the stringent measures: “It is an extreme use of the tax code to correct an extreme and excessive wrong done to the American taxpayer,” said Representative Dave Camp of Michigan, senior Republican on the tax-writing Ways and Means Committee, who backed the measure despite reservations.
"But experts on constitutional and tax law said it was likely the House bill could pass muster. Numerous court rulings have upheld retroactive tax provisions, particularly over short periods. The House bill applies back only to Jan. 1, 2009. The measure is also strengthened by the fact that it does not apply to just one company or group of individuals, and does not take aim only at past bonuses but also bonuses to be paid in the future, experts said.
"The chief executive of insurance giant American International Group told Congress today that he allowed millions of dollars in "distasteful" bonuses to be paid to top employees of a troubled division because he was trying to prevent that business from collapsing, but he said he has asked recipients to return part of the payments in view of public outrage over them."
“I have asked the employees of A.I.G. Financial Products to step up and do the right thing,” Mr. Liddy told lawmakers. “Specifically, I have asked those who received retention payments of $100,000 or more to return at least half of those payments.”
"Edward M. Liddy said AIG has been making progress in winding down a part of the firm that caused the problems, but he noted that the division -- AIG Financial Products -- still has a $1.6 trillion portfolio that continues to impose "substantial risk."
"Explaining his decision to let the retention bonus payments go ahead, Liddy told a subcommittee of the House Financial Services Committee, "I was trying desperately to prevent an uncontrolled collapse of that business." He referred to $165 million in retention bonuses that were paid last weekend, out of a total of more than $400 million in such bonuses payable for 2008 and 2009.Explaining his decision to let the retention bonus payments go ahead, Liddy told a subcommittee of the House Financial Services Committee, "I was trying desperately to prevent an uncontrolled collapse of that business." He referred to $165 million in retention bonuses that were paid last weekend, out of a total of more than $400 million in such bonuses payable for 2008 and 2009."
"In response to questions, Liddy said AIG has kept the Federal Reserve informed of its plans, including the bonus payments, but had not directly discussed them with the Treasury Department or Congress. He denied that there was "any intent to deceive or hide anything" from Treasury or the Congress."
"Of the 418 employees who received bonuses, 298 got more than $100,000, according to the New York attorney general, Andrew M. Cuomo. The highest bonus was $6.4 million, and 6 other employees received more than $4 million. Fifteen other people received bonuses of more than $2 million and 51 received $1 million to $2 million."
"Before Mr. Liddy’s testimony, the A.I.G. affair prompted President Obama to declare that a culture of “excess greed” demonstrated in A.I.G.’s dealings should have no place in a new Wall Street.
“As we get out of this crisis, as we work toward getting ourselves out of this recession, I hope that Wall Street and the marketplace don’t think that we can return to business as usual,” the president said after meeting with his economic advisers."
"Accordingly, Mr. Obama said, he will push for quick Congressional legislation to create a regulatory framework for entities like A.I.G., which is not a bank, similar to the powers that the Federal Deposit Insurance Corporation has over banks."
“I’m angry,” the president said. “What I want us to do, though, is channel our anger in a constructive way.”
"The president reiterated his faith in Treasury Secretary Timothy F. Geithner. “No Treasury secretary since maybe Alexander Hamilton has faced such challenges,” he said. Mr. Obama has already called for Mr. Geithner to explore whatever legal means might be available to retrieve the bonuses. The president and his aides have also noted often that the near-collapse of A.I.G. and other aspects of the financial crisis began to manifest themselves before the start of the Obama administration."
"Liddy said AIG has "made great progress in winding down" its financial products business, reducing its portfolio by about $1.1 trillion. But with $1.6 trillion still on the books, "there is a risk that that could blow up," he said. "If it explodes, it could cause irreparable damage" to the progress already made and could jeopardize a massive federal bailout of the entire company, Liddy added. He said of the bonus payments, "in the context of the $1.6 trillion and the money already invested in us, we thought that was a good trade."
"The AIG chief, who said he came out of retirement to run the company for a salary of $1 a year, told the subcommittee he fears that "the damage is done" from the bonuses and that employees who are needed to wind down the financial products division are likely to return them "with their resignations." He praised those employees for reducing the risk to American taxpayers through their efforts so far."
"We have to keep shrinking this business dramatically and quickly so it doesn't get away from us," he said.
"By late afternoon, several legislative proposals to recoup the bonuses were being discussed in the Capitol, although their prospects were not clear."
“We are the effective owners of this company,” said Representative Barney Frank of Massachusetts, the chairman of the House Financial Services Committee, going on to suggest a lawsuit to recover the $165 million in bonuses. “I think it’s worth trying.”
"The lawmakers, having heard from their furious constituents, seemed unwilling to be mollified by the pledge from Mr. Liddy, who took the helm at A.I.G. last fall after it had begun imploding because of reckless investments, that the company’s 116,000 employees were united in wanting to work out of the morass, and work “shoulder to shoulder” with federal regulators.
"Instead, the lawmakers were focused on the recipients of bonuses at the very unit that caused A.I.G. “to teeter on the brink of collapse,” as Representative Paul E. Kanjorski, the Pennsylvania Democrat who heads the capital markets subcommittee, put it.
“A million dollars is a sizable sum to the typical American family,” Mr. Kanjorski said, “and a million dollars is a lottery prize for anyone who has just lost a job.” He called on A.I.G.’s employees to join with the legions of Americans who “have made personal sacrifices to survive these difficult times.”
"For the American people, said Representative Paul Hodes, Democrat of New Hampshire, the initials “A.I.G.” now stand for “arrogance, incompetence and greed.”
"In prepared testimony submitted to Congress earlier today, Liddy said that "mistakes were made at AIG on a scale few could have ever imagined possible." He said the company strayed from its insurance business into what became "an internal hedge fund" that then grew overexposed to market risk."P
"But he said AIG's new management team has addressed the company's liquidity crisis and stabilized its cash position."
"As lawmakers heard testimony on AIG, President Obama called on Congress to give the government greater regulatory authority over financial institutions. Speaking to reporters on the White House lawn before leaving on a trip to California, he said he is consulting with Capitol Hill on legislation that would provide resolution authority similar to the powers that the Federal Deposit Insurance Corp. holds over banks."
"It would allow us proactively to get out in front, make sure that we're separating out bad assets from good, dealing with contracts that may be inappropriate, and preventing the kinds of systemic risks that we've seen taking place with AIG," Obama said. He said this authority would be part of "a broader package of regulatory steps."
"While Americans are "rightly outraged" by the AIG bonuses, "just as outrageous is the culture that these bonuses are a symptom of," Obama said, "a situation where excess greed, excess compensation, excess risk-taking have all made us vulnerable and left us holding the bag." He reiterated his call to move beyond "a constant bubble-bust mentality" and build a foundation for sustainable economic growth."
"I hope that Wall Street and the marketplace don't think that we can return to business as usual," Obama said. "The business models that created a lot of paper wealth but not real wealth in the country and have now resulted in crisis can't be the model for economic growth going forward."
"Asked if he wished he had found out about the bonuses sooner than last week, Obama said "nobody here" drafted the bonus contracts or supervised AIG when it started to "put the economy at risk." But he said, "We are responsible, though. The buck stops with me. And my goal is to make sure that we never put ourselves in this kind of position again."
"Obama also rebuffed calls for the resignation of Treasury Secretary Timothy F. Geithner, saying he has "complete confidence" in him. "Nobody's working harder than this guy," the president said with Geithner standing nearby. "He is making all the right moves in terms of playing a bad hand."
"Liddy acknowledged that AIG has received "generous" federal aid, and he conceded that "the patience of America's taxpayers is wearing thin." Because of a need to "continue managing our business as a business" and "certain legal obligations," he said, "AIG has recently made a set of compensation payments, some of which I find distasteful."
"Liddy added that "we are all in this together" and that the company is working hard to execute a restructuring plan aimed at repaying AIG's debt to the government "to the maximum extent possible," continuing the company's main insurance business and protecting policyholders.
"Frank called the bonuses "wholly unjustified" and said it was time for the federal government to assert its "ownership rights" under the bailout to make major changes in the way the company operates. Because of the Treasury's assistance, the government now effectively owns about 80 percent of AIG. He attributed the bonus problem to the way AIG contracts are written."
"Frank called the bonuses "wholly unjustified" and said it was time for the federal government to assert its "ownership rights" under the bailout to make major changes in the way the company operates. Because of the Treasury's assistance, the government now effectively owns about 80 percent of AIG. He attributed the bonus problem to the way AIG contracts are written."
"They give themselves contracts which effectively insulate them from losses," he said. "What I think we should be doing is exercising our rights as owners of this company and bring lawsuits." The people getting the bonuses "performed so badly" and the losses are so great, he said, "that we are justified in rescinding the bonuses."
"In deciding to bail out AIG, the government concluded that, given the company's "deeply embedded role in the global financial system," it could not be allowed to fail because a collapse "posed too great a risk to the global economy, particularly in the context of the near or actual failure of other financial institutions," Liddy said.
"Seeking to assuage the public anger over the bailouts, Liddy said AIG understood that its behavior needed to change because of its receipt of federal bailout money."
"So, on our own initiative, we adopted a series of restrictions on executive compensation, eliminated our federal lobbying activities, halted corporate political contributions and kept controls on our expenses," he said.
"The bonus retention payments range from $1,000 to nearly $6.5 million, according to documents that AIG provided to the Treasury Department. Seven employees were getting more than $3 million, and 73 employees -- including 11 who no longer work at AIG -- received $1 million or more last week, according to New York Attorney General Andrew Cuomo.
With a severe economic crisis facing our nation; Congress has begun to move the wheels of change ever so slowly to bring about regulatory reform practices to establish laws that will hopefully avert the type of financial predicament we find ourselves confronting today from taking place in the future. Similarly, Congress, in its attempts to bring legislative structure to President-elect Obama’s economic rescue plan must also determine what caused such a calamity to occur in the first place. “The moment calls for nothing less,” in the opinion of Ron Chernow writing for the New York Times, “than a sweeping inquest into the twin housing and stock market crashes to create both the intellectual context and the political constituency for change.” Chernow suggests that the Congress is treading into territory that it has had difficulty successfully navigating in the past and will require the combination of level-headedness and innovative zeal to create reliable solutions: “For inspiration, Chernow recommends that “Congress should turn to the electrifying hearings of the Senate Banking and Currency Committee, held in the waning months of the Hoover presidency and the early days of the New Deal.” Often referred to as the Pecora Hearings, Chernow explains their profound record of accomplishments; “these hearings have taken their name from the committee counsel, Ferdinand Pecora, a former assistant district attorney from New York who, starting in January 1933, was chief counsel for the investigation. Under Pecora’s expert and often withering questioning, the Senate committee unearthed a secret financial history of the 1920s, demystifying the assorted frauds, scams and abuses that culminated in the 1929 crash.” Pecora, a Sicilian immigrant and son of common working people, had established his early credentials by campaigning “for Teddy Roosevelt" which "imbued" him "with the crusading fervor of the Progressive Era” that he wore as a badge of honor. As a prosecutor in the 1920s, he had shut down more than 100 “bucket shops” — seamy, fly-by-night brokerage houses — and this had tutored him in the shady side of Wall Street.” During the Senate Banking and Currency Committee hearings, Pecora gained a reputation for tenacity as he aggressively took on the money barons of Wall Street who appeared before the committee that was attempting to uncover the truth of what had caused the financial crash. Pecora, with a cigar often wedged into his mouth and displaying an aggressively focused demeanor, gained enormous credibility as “an earthy populist who appealed to Depression audiences.” Chernow described Pecora as being “meticulous in preparation and legendary in stamina, mastering reams of material and staying up half the night before interrogations, aided by John T. Flynn, an Irish-American journalist, and Max Lowenthal, a Jewish lawyer.” Flynn expressed his admiration for Pecora when he wrote; “I looked with astonishment at this man who, through the intricate mazes of banking, syndicates, market deals, chicanery of all sorts, and in a field new to him, never forgot a name, never made an error in a figure, and never lost his temper.” Pecora’s unrelenting examination of the witnesses who sat before him gave the American people an easy to follow, dramatic recreation of the events of great prosperity during the 1920s that finally ended with the crash of 1929. Chernow explains that: “Pecora exposed a stock market manipulated by speculators to the detriment of small investors who could suddenly attach names and faces to their losses.” Pecora relentless questioning managed to defame the greatest members of the banking community who for most Americans “had been demigods in the 1920s, their doings followed avidly, their market commentary quoted with reverence. They had inhabited a clubby world of chauffeured limousines and wood-paneled rooms, insulated from ordinary Americans. Now Pecora defrocked these high priests, making them seem small and shabby.” Pecora revealed that: “On Black Thursday of 1929,” when “the nation had applauded a seemingly heroic attempt by major bankers, including Albert Wiggin of Chase and Charles Mitchell of National City, to stem the market decline. Pecora showed that Wiggin had actually shorted Chase shares during the crash, profiting from falling prices. He also revealed that Mitchell and top officers at National City had helped themselves to $2.4 million in interest-free loans from the bank’s coffers to ease them through the crash. National City, it turned out, had also palmed off bad loans to Latin American countries by packing them into securities and selling them to unsuspecting investors. By the time Pecora got through with the bankers, Senator Burton Wheeler of Montana was likening them to Al Capone and the public referred to them as “banksters,” rhyming with gangsters.” Chernow explained that Pecora’s unrelenting attacks brought answers to “a public aching for retribution, Pecora was playing with combustible chemicals, and Wall Street complained that he was destroying confidence. President Franklin Roosevelt retorted that the bankers “should have thought of that when they did the things that are being exposed now.” It was hard for Wall Street to mount a legitimate defense as Pecora pilloried them daily.” Pecora was able to harass “the House of Morgan ... partners into admitting that they had paid no taxes for 1931 and 1932 — an incendiary revelation when the country was undertaking huge public works projects to combat unemployment. That the Morgan men had avoided taxes because of stock market losses was lost amid the hubbub.” Pecora went on to expose to the public “Morgan’s “preferred list” by which the bank’s influential friends participated in stock offerings at steeply discounted rates. The renowned names on the list, including Calvin Coolidge, the former president, and Owen J. Roberts, a Supreme Court justice, shocked the nation with its unseemly association of money and power.” Chernow continued that: “One Morgan partner, George Whitney, lamely explained that the intent was to safeguard small investors by preventing them from assuming such risk. To which Pecora responded tartly in his best-selling book, “Wall Street Under Oath,” “Many there were who would gladly have helped them share that appalling peril!” The tableau that unfolded “over the Morgan testimony” caused “such a furor” that “Senator Carter Glass of Virginia shook his head and sighed, “We are having a circus, and the only things lacking now are peanuts and colored lemonade.” Seizing on the comment, a press agent for the Ringling Brothers Circus took advantage of a pause in the hearings to pop Lya Graf, a midget in a blue satin dress, on the lap of the portly and surprised J. P. Morgan Jr. The committee chairman, Senator Duncan Fletcher of Florida, pleaded with newspapers not to print the pictures, which only made them rush to do so.” Chernow described that: “The photo of Morgan with a circus midget planted on his lap became the signature shot of the hearings, emblematic of Wall Street’s fallen state. An embittered J. P. Morgan Jr. said Pecora had “the manners of a prosecuting attorney who is trying to convict a horse thief.” Despite the many sideshows and sensationalism; “the Pecora hearings laid the groundwork for financial reform legislation. By the time they ended in May 1934, they had generated 12,000 printed pages of testimony, collected in several thick volumes. These documents have served generations of historians. Our national narrative of stock market mayhem in the 1920s is largely composed of characters and anecdotes gleaned from their pages.” Chernow reminds us that: “Pecora not only documented a litany of abuses, but also paved the way for remedial legislation. The Securities Act of 1933, the Glass-Steagall Act of 1933 and the Securities Exchange Act of 1934 — all addressed abuses exposed by Pecora. It was only poetic justice when Roosevelt tapped him as a commissioner of the newborn Securities and Exchange Commission.” Chernow states that: “Our current stock market slump and housing bust can seem like natural calamities without identifiable culprits, creating free-floating anger in the land. A public deeply disenchanted with our financial leadership is desperately searching for answers.” Chernow concludes with the following suggestion: “The new Congress has a chance to lead the nation, step by step, through all the machinations that led to the present debacle and to shape wise legislation to prevent a recurrence.” It was done so ably before by chief counsel Pecora; it can and it must be done again.
Soon to be president Barack Obama may be using strong words to describe the state of our nation's economy; but his stimulus plan is coming up short for what's needed to kick the country out of its Bush doldrums. “I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years.” Paul Krugman agrees with Obama's explanation "why the nation needs an extremely aggressive government response to the economic downturn... He’s right. This is the most dangerous economic crisis since the Great Depression, and it could all too easily turn into a prolonged slump." On what he refers to as the Obama Gap, Krugman complains that: "... Mr. Obama’s prescription doesn’t live up to his diagnosis. The economic plan he’s offering isn’t as strong as his language about the economic threat. In fact, it falls well short of what’s needed." Krugman explains: "Bear in mind just how big the U.S. economy is. Given sufficient demand for its output, America would produce more than $30 trillion worth of goods and services over the next two years. But with both consumer spending and business investment plunging, a huge gap is opening up between what the American economy can produce and what it’s able to sell. And the Obama plan is nowhere near big enough to fill this “output gap.” Just this week, Krugman explains: "the Congressional Budget Office came out with its latest analysis of the budget and economic outlook. The budget office says that in the absence of a stimulus plan, the unemployment rate would rise above 9 percent by early 2010, and stay high for years to come. Grim as this projection is, by the way, it’s actually optimistic compared with some independent forecasts. Mr. Obama himself has been saying that without a stimulus plan, the unemployment rate could go into double digits." More precisely, Krugman details the crux of his problem with Obama's plan that: "Even the C.B.O. says, however, that “economic output over the next two years will average 6.8 percent below its potential.” This translates into $2.1 trillion of lost production. “Our economy could fall $1 trillion short of its full capacity,” declared Mr. Obama on Thursday. Well, he was actually understating things. To close a gap of more than $2 trillion — possibly a lot more, if the budget office projections turn out to be too optimistic — Mr. Obama offers a $775 billion plan. And that’s not enough." Of course, Krugman continues: "... fiscal stimulus can sometimes have a “multiplier” effect: In addition to the direct effects of, say, investment in infrastructure on demand, there can be a further indirect effect as higher incomes lead to higher consumer spending. Standard estimates suggest that a dollar of public spending raises G.D.P. by around $1.50. But only about 60 percent of the Obama plan consists of public spending. The rest consists of tax cuts — and many economists are skeptical about how much these tax cuts, especially the tax breaks for business, will actually do to boost spending... The bottom line is that the Obama plan is unlikely to close more than half of the looming output gap, and could easily end up doing less than a third of the job." Krugman wants to know: "Why isn’t Mr. Obama trying to do more?" Is the "fear of raising the debt causing Obama's hesitancy because dangers do exist "with large-scale government borrowing — and this week’s C.B.O. report projected a $1.2 trillion deficit for this year. But," Krugman complains; "it would be even more dangerous to fall short in rescuing the economy." Obama did say, Krugman reiterates: “I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years.” And Krugman realizes: "there’s a real risk that we’ll slide into a prolonged, Japanese-style deflationary trap — but the consequences of failing to act adequately aren’t much better." Krugman is truly perplexed and is searching for answers: "Is the plan being limited by a lack of spending opportunities? There are only a limited number of “shovel-ready” public investment projects — that is, projects that can be started quickly enough to help the economy in the near term. But there are other forms of public spending, especially on health care, that could do good while aiding the economy in its hour of need. Or is the plan being limited by political caution? Press reports last month indicated that Obama aides were anxious to keep the final price tag on the plan below the politically sensitive trillion-dollar mark. There also have been suggestions that the plan’s inclusion of large business tax cuts, which add to its cost but will do little for the economy, is an attempt to win Republican votes in Congress." Krugman concludes without determining Obama's hesitancy to act boldly: "Whatever the explanation, the Obama plan just doesn’t look adequate to the economy’s need. To be sure, a third of a loaf is better than none. But right now we seem to be facing two major economic gaps: the gap between the economy’s potential and its likely performance, and the gap between Mr. Obama’s stern economic rhetoric and his somewhat disappointing economic plan." In addition, Obama seems to be content with just getting the employment rate to cover the 2.5 million jobs lost last year when he should be concentrating on magnifying job production beyond his break even point. Obama has three factions of his own party pushing him in three different directions: conservative Democrats are highly critical of the cost of the stimulus plan; moderate Democrats are paralyzed by the thought of adding to an already huge deficit; and liberal Democrats are seeking a larger stimulus package that pumps more money into the infrastructure work that is sorely needed, pushes us more rapidly toward green energy projects and increases spending for social programs. All the while Republicans are clamoring for tax breaks and incentives to spur on the private sector. Forget the thirty years plus of supply side, deregulatory solutions that "trickle-downed" us all the way into the economic abyss we find ourselves in today. Let the Keynesian approach lead the country to better times. Only the government can currently create the jobs we need to gain economic recovery. By your own admission, time is growing short. Obama is rapidly approaching the time when he must move from trying to listen and consider everyone's differing viewpoints and boldly act to energize the economy from the ground up as he so eloquently phrased during the campaign. He must craft a stimulus package that create jobs; lots of jobs that will raise the spirits of the people hurting the most at the bottom of the economic ladder. Jobs that will raise people's standard of living. Mr. Obama and the Democrats have the backing of the nation to turn the economy around, and they have control of the presidency and the Congress. The time to act is upon us as a nation. Mr. Obama must gather all the eloquence he can muster and give the American people the straight talk they're waiting to hear. Catering to wholly bipartisan initiatives will only slow down and cripple the stimulus. Obama needs to show Americans a grittier edge in his assessments of the economy. He must rise the nation beyond the "output gap" he is allowing to sabotage his stimulus package. Obama's got to get tougher with the politicians and interest groups that stand between him and his ability to give American's what they desperately need! Jobs! Jobs that will pay the people the money the nation needs to rise above the crippling fears caused by the Bush doldrums!
ALICIA MUNDY and JARED A. FAVOLE, of the Wall Street Journal, write that: "A group of scientists at the U.S. Food and Drug Administration on Wednesday sent a letter to President-elect Barack Obama's transition team pleading with him to restructure the agency, saying managers have ordered, intimidated and coerced scientists to manipulate data in violation of the law. The nine scientists ... say the FDA is a "fundamentally broken" agency and describe it as place where honest employees committed to integrity can't act without fear of reprisal." The letter includes a passage that reads: "There is an atmosphere at FDA in which the honest employee fears the dishonest employee." The nine scientists focus their concerns on the scientific procedures used to review medical apparatuses that they say has been "corrupted and distorted by current FDA managers, thereby placing the American people at risk." A spokesperson for the agency has explained that the FDA is "actively engaged in a process to explore the staff members' concerns and take appropriate action." Commissioner Andrew von Eschenbach and Bill McConagha, the assistant commissioner for accountability and integrity have been contacted by the nine scientists. The Wall Street Journal reporters say: "The agency has been under fire from both parties in both Houses of Congress as being too close to industry. Several leading politicians, including Sen. Chuck Grassley have complained that FDA leaders often ignore or suppress their own scientists' opinions on safety issues involving drugs and devices. Those concerns were also aired in a report by the National Academy of Sciences' Institute of Medicine in 2006. FDA leaders, including drug division chief Janet Woodcock, have said they are working to improve the culture at the FDA, and are listening to dissent from their experts and doctors." The nine scientists have expressed their hopes that the FDA's current leaders are quickly replaced by the incoming Obama Administration. The nine scientists "says the FDA approved such devices without clinical evidence showing they were effective in detecting breast cancer. Since 2006, FDA physicians and scientists have recommended five times that these devices not be approved without valid scientific and clinical evidence. The group said there needs to be a complete restructuring of the evaluation and approval process, and that Mr. Obama needs to sign new legislation giving protection to government employees who speak out against corruption." The untenable situation at the FDA reflects poorly on the conduct of the Bush Administration when it comes to oversight of FDA procedures regarding medical devices. The most important of several questions looming over the FDA's disregard for established scientific procedures is whether the actions of the leadership were intentional or a matter of gross misconduct.
When the chairman of the Senate Budget Committee, Kent Conrad, a Democrat from North Dakota and Judd Gregg, the senior Republican from New Hampshire on the Senate Budget Committee write a column together in the Washington Post it gets noticed; and for the reader, it offers a chance to assess the legislative responsibilities and goals they face. The point of the two senators' missive is to announce their agreement that: "When Congress takes up an economic recovery package this month, it should be linked to a bipartisan commitment to begin addressing the long-term budget challenges confronting our nation." Both men realize that the economic recovery package presents both opportunity and a need for diligence: "Washington must act quickly to respond to the economic crisis. More than 2 million jobs have been lost in the past year; businesses are struggling; credit markets have been virtually frozen; home values have plummeted; and retirement savings have been wiped out. Our first priority must be to reverse this decline and restore economic growth. We recognize that enacting an economic recovery package will involve a worsening of our near-term budget picture. In this case, more borrowing by the government is reasonable and understandable, as long as it is for proposals that will truly help spur economic activity. But we also face a long-term budget crisis of unprecedented proportions. The leading edge of the baby-boom generation began retiring in 2008. The combination of this demographic tidal wave and the exploding cost of health care and inadequate government revenue will swamp federal finances." The two leaders recognize that any attempt to provide relief to the economy carries with it a "need to simultaneously signal to the markets that we are serious about restoring fiscal discipline and putting our budget back on a sound long-term path. Linking these short-term and long-term plans is the best way to instill global confidence in the U.S. financial system." Conrad and Judd are in agreement with President-elect Barack Obama's commitment "that "part and parcel" of our economic recovery package should be a "plan for a sustainable fiscal situation long term." That is exactly what we are calling for." And in order to achieve Obama's goals, the senators propose swift action to control "the cost curves of entitlement programs that will otherwise overwhelm our budget, as well as make needed reforms to our out-of-date and inefficient tax code." The greatest threat to success in the senators' opinions would occur with the length of time it takes for the passage of the legislation which would leave fewer palatable choices and determine the extent to which: "the more draconian our choices will become and the more likely they are to be forced upon us." So the two leaders of the Senate Budget Committee seek the formation of a "bipartisan fiscal task force" that "would establish a process to confront the long-term fiscal imbalance. It would consist of a bipartisan panel of lawmakers and administration officials tasked with developing a legislative proposal to steer our budget back on course. Everything, including spending and revenue, would be on the table." The senators seek a form of bipartisanship focused on "assembling the best minds and the best ideas from across the political spectrum. This spirit of bipartisanship is crucial. We cannot afford to return to the acrimony that has stymied past efforts to address our long-term budget issues." The dire consequences of our economic recession have forged an agreement between the two ranking members of the Senate Budget Committee founded upon hopeful but necessary proposals for co-operation. Only their ability to remain true to their plans for bipartisanship and avoid partisan rancor and obfuscation will determine their success as a committee, a Congress and a desperate but hopeful nation that is staring straight into the darkness of an impending economic Depression.
Alexis Madrigal, writing in the WIRED SCIENCE BLOG posts an entry based on what he considers to include the top 10 examples of progress made in green-technology. It seems that the recent presidential election of 2008 have brought an increased sense for the need for the United States to concentrate on achieving advancements in green-tech. Investors are committing capital and other necessary resources into the green-tech sector. We now have a president, Barack Obama and a Congress that recognizes the benefits afforded by green-tech and it seems the majority of Americans also have a strong sense of will to create workable green solutions; the only factor standing in our way is the current global economic crisis that has created a recession in the United States. That’s why it is so important that the federal government puts its considerable authority behind green-tech and create wise investments in the public and private sectors to push the nation out of its current economic stagnation. So for a look at Alexis Madrigal’s take on the top 10 breakthroughs in green-tech point your browser to this link that I’ve provided and see if you agree the choices!
