Congress, it seems, loves to tell people what to do and how to act. Then, they seem to exclude themselves from all of the same rules. While that may make sense sometimes for certain cases, many times it does not.
This 'camouflage' moth was on our building. The camo doesn't work so well on the red bricks. It has nothing to do with this blog, it was just a neat looking moth that you needed to see.
It seems to be great sport for the Senate and the House to parade people in front of them while they pontificate about how poorly this or that company, industry, government agency was run or how they traveled to sit before them. If they are providing oversight and care, why don't they review some of the different government agencies BEFORE there is a problem that hits the headlines and find out what is working and not (and how they can make that department smaller and more efficient if it can't be eliminated outright).
Here are some open ideas for our congressmen to employ:
- Financial Expert. In the Sarbanes-Oxley Act and the regulations that followed you require that the board members contain at least one financial expert. If this makes sense for corporations, it certainly makes sense for Congress. Every committee must contain at least one financial expert (lose some lawyers, it will be okay) from among your ranks.
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- This should stop (okay, slow down or moderate) some of the nonsense if some financial adults were present.
- It doesn't count that you have someone on your staff who took a finance course. It must be a member of congress.
- Financial Reporting. Many rail against the problem and scourge of off-balance sheet liabilities and maker rules requiring different reporting/disclosure. When you look at the US budget and report deficits, they need to include Social Security, Freddie, Fannie, etc.
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- I don't know any firm that missed more than a trillion dollars of liabilities.
- Confirmation Minimums. If you are approving high level positions that govern an area they should be pretty clean in that regard. Take the IRS as a hypothetical example. A person shouldn't be confirmed that oversees the whole area if they actively and willfully avoid paying taxes.
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- Just like your kids leaning over and saying 'why are you going 45 when the speed limit says 35 daddy?'. You can either slow down or try to justify why your skill, talent, need to get somewhere are important enough to endanger others.
I could write much more, but my blood pressure is still in a good range and don't want to test it. Plus, there is work to be done.
-c
Treasury: Situational Awareness – Lehman and San Mateo County
February 24, 2010’s WallStreet Journal ran an article entitled Lehman’s Ghost Haunts California. This article is well worth a good and critical read. Emphasis on the critical. It covers, essentially, one side of the story about San Mateo County and their loss of $155mm (reported by them) from the collapse of Lehman Brothers. We’ll be more frank in this blog entry even if it makes people feel uncomfortable.
The article states that “San Mateo’s board of supervisors ordered an independent review of the way the county investment fund was run, but found no wrongdoing.” And, a little later “San Mateo’s treasurer had invested in highly rated securities and put no more than 10% of the fund in any single issuer.” Okay, no laws were broken. Nobody violated the written investment policy as written. However, this fails to tell all of the key points about what was going on at the time. I would like to see the reporter dig up some useful information to tell us – such as:
“If there are warning signs all over the place about ice on the road - and snow is falling, anyone who doesn’t slow down to adjust for conditions is responsible for flying off the road. Claiming they didn’t break the posted speed limit isn’t going to be a good argument – especially if they were accelerating into the corner when they hit the ice.”
The article highlights a push to try to secure bailout funds for municipalities that held Lehman paper and makes comparisons to the bank bailout. While we can all argue about appropriateness of the ‘voluntary’ capital infusions to banks, there are some important differences that are not noted:
Lessons Re-Learned:
If anyone thinks that reducing treasury staff levels or eliminating funding for treasury systems and tools is a good idea, they may need some shock therapy or recent (and old) history lessons. However, no system can completely prevent operator error.