Dear Mr. President:

The loyalty oath mandated by the Constitution requires that Federal officials promise to “faithfully execute” the duties of their office and “preserve, protect and defend” the U.S. Constitution.  But a description of those terms is noticeably absent. Unfortunately, too many officials have filled the void with their own notions of loyalty.  All too often, public officials have abused the powers of their office to take care of themselves and their relatives, friends, supporters, and contributors.  Others have abused their powers to carry out or cover-up illegal activities (think, “Watergate” and “Iran-Contra” scandals).  However, unless convicted for theft, bribery or other criminal offenses, an official who abuses the powers of office to achieve personal benefit or misguided goals can’t be disqualified, much less prosecuted.

To change this culture of greed and moral corruption, you should  impose a code of ethics based upon a few simple precepts: (1) All Public Officials, whether elected or appointed, are bound by a fiduciary duty to exercise their powers for the public’s benefit, which means they must put the public’s interest ahead of any personal interests; (2) Getting elected, appointed, or job tenure is a purely personal interest and should NEVER be considered acting in the public’s interest; (3) The commission of illegal conduct or the cover-up of illegal conduct is morally corrupt and should NEVER be considered acting in the public’s interest; and (4) If a public official has a potential conflict between a private interest and the public’s interest in any matter over which the official may take or refuse to take official action, the official must DISCLOSE the potential conflict of interest before taking or refusing to take official action.

To put this Code of Ethics into play, you should establish a public ethics agency with a small staff (no more than 5 to start) and a small, but guaranteed, annual budget. The ethics agency must be insulated as much as possible from interference by any government branches, agencies or officials. This agency should have no investigative or prosecutorial powers; its sole duties would be to receive reports (on forms available on their website) of alleged unethical conduct or potential conflicts of interest and to make prima facie determinations regarding whether (1) the alleged unethical conduct potentially violated the Ethics Code (in which case the matter should be referred to another agency for investigation, and any disciplinary proceedings that might be warranted); and (2) whether a potential conflict of interest (see below) is sufficient to require an official’s recusal.

You also should institute a new Fiduciary Oath for all public officials, similar to the forms some states now require all fiduciaries (trustees, attorneys-in-fact, etc) to sign under oath before they’re allowed to exercise power over the assets or affairs of other persons.  This form should begin with a preamble, such as, “I, (name), acknowledge that as a public official I have a fiduciary duty to exercise my official duties and powers only in the best interests of the nation, putting the public welfare ahead of my personal interests in all official matters.  I understand that winning an election, appointment or job tenure, for me or any other person, is a purely personal interest, and I agree never to exercise the powers of my office, or engage in any activities while acting in an official capacity, for the primary purpose of helping myself or any other person win an election, appointment or job tenure.  I further understand that using the power of my office to commit illegal activities or cover-up illegal activities committed by me or any other person is an abuse of power, unethical and morally corrupt.  Therefore, I agree never to exercise my official duties or powers for such purposes.”

Following the preamble, the specific conflict of interest provisions should be laid out:

1.  If I have, or any family member, friend, supporter or contributor has, a financial or other personal interest in any legislation, proceeding, action, determination or decision on which I may act or participate, I will report that potential conflict of interest to the ethics agency before taking any action in that matter.

2.  If the ethics agency determines that the potential conflict of interest warrants my recusal, I will recuse myself from taking any actions in that matter unless I receive written certifications that my decisions/actions will be in the best interests of the nation regardless of the potential conflict-

• If I am a subordinate officer working for the Executive Branch (including the White House, or any federal department or agency), certification from the next two superior officers in my chain of command or reporting;

• If I am working for a U.S. senator or representative, certification from the congressperson for whom I work;

• If I am working for a federal judge, certification from the judge for whom I work;

• If I am a senator or representative, certification from both the majority and minority leaders of my House of Congress, and if I am a majority or minority leader, certification from both leaders of the other House of Congress;

• If I am a federal judge, certification from the president judge or chief judge of my court, and if I am a president or chief judge, certification from the president or chief judge of the court to which my decisions would normally be appealed;

• If I am the head officer of a department or agency, certification from the cabinet officer who has jurisdiction over my department or agency, and if I am a cabinet officer, certification from the President or Vice-President.

• If I am the chief justice of the Supreme Court, certification from the Speaker of the House and the President or Vice-President;

• If I am the President or Vice-President, certification from the next two officers in line of succession.

3.  I will not attempt to directly or indirectly influence the action or decision of any other public official regarding my recusal, or regarding any action or decision concerning any matter in which I am recused.

4.  I will not use my office to obtain any undisclosed profit or benefit of any kind for myself, a family member, friend, contributor or any other person or entity.

5.  I will not put the interests of any special interest group ahead of the interests of the nation as a whole.

6.  If a public official, contributor, or other person attempts to improperly influence my decision or action in any official matter by the use of threats, bribery or gratuities, or in any other manner, I will immediately report such attempt to the ethics agency.

7.  I understand that accepting a gratuity of any kind, including campaign contributions or anything else of value, that was conferred or offered with the intent to influence my official actions in any matter—regardless of whether the gratuity was conferred before or after my official action was taken, or whether the “intent to influence” was conveyed to me as part of an express agreement, a handshake, a wink and nod, or any other silent or implied understanding—is improper and violates the Ethics Code. By signing this Fiduciary Oath I certify that I will not accept any such gratuities.

8.  With respect to any such gratuities I received or agreed to accept before signing this Fiduciary Oath, I certify that before signing this Oath-

• I reported such gratuities to the ethics agency; and,

• I returned any gratuities already received.

Finally, Mr. President, I suggest that you work with Congress to make violation of the Fiduciary Oath a crime, punishable by imprisonment where appropriate, disgorgement of wrongfully obtained gratuities or profits, dismissal from office, and disqualification for future elected or appointed public office.

Respectfully,

Unabashed Truthteller

There are few institutions in American society about which people have more misguided ideas than the criminal justice system. As I use that term, the “criminal justice system”  includes professional participants (judges, prosecutors, criminal defense lawyers, police and other law enforcement agents) and lay participants (victims, witnesses, defendants and jurors).

For years I was a professional participant in the criminal justice system, and know it well. I have heard defense attorneys complain about over-zealous prosecutors, prosecutors complain about over-zealous defense attorneys, judges complain about over-zealous or unprepared lawyers (on both sides), prosecutors complain about judges being too lenient or corrupt, and defense attorneys complain about judges being too harsh or forgetting their friends. I have heard police officers complain that defense attorneys bribe judges and suborn perjured testimony to get their clients acquitted, and defense attorneys complain that police officers commit perjury to convict their clients.  I have heard victims and witnesses complain that the system favors defendants by allowing multiple delays, and defendants  claim that the system is biased against them because (for example) so many black men are convicted of crimes and imprisoned.  In other words, there is an endless litany of complaints and suspicions about the system, which naturally lead to the ultimate question: Does the “criminal justice system” ever achieve justice?!!

That has been a difficult question to answer, because “justice” is an intangible concept.  It’s hard to quantify something that cannot be seen, heard or touched. It’s qualities normally are assessed by people in the context of their values, and their stake in the criminal proceedings, which in turn influence how those people perceive events or outcomes.  Though it is risky to generalize, for the sake of providing examples of this principle I will make certain assumptions, with the understanding that they might not hold true in every situation: A robbery victim who was beaten during a store robbery probably feels that the defendant should receive a lengthy prison sentence;  The defendant that committed the robbery, but entered a guilty plea instead of going to trial, probably feels that he deserves a probationary sentence for pleading guilty; The investigators who accumulated the evidence, interviewed witnesses, and arrested the defendant, probably feel that a probationary sentence makes a mockery of their work and the criminal justice system;  Prisoners’ rights groups probably feel that prisons are just for warehousing offenders, and that a prison sentence would waste defendant’s potential for rehabilitation;  Victims’ rights groups probably feel that a probationary sentence would denigrate the seriousness of defendant’s crimes;   Court Administrators and supervising judges probably feel that they need to encourage guilty pleas to trim the court backlog, and that defendants will stop pleading guilty if they’re not assured of lenient sentences;  Prison officials probably feel that probationary sentences will help avoid prison overcrowding; The defendant’s family probably feels that if he is on probation he will get a job and help support his family; The Neighborhood Merchants Association and Community Group probably feel that a lenient sentence will send the message that it’s okay to rob stores in that neighborhood, because the perpetrators won’t get prison sentences. And so it goes…

If the judge imposes probation, the victim, the prosecutor and half of the above stakeholders will feel that justice was denied. If the judge imposes a long prison sentence, the defendant, his defense attorney and the other half of the above stakeholders  will feel that justice was denied. If the judge split’s the baby by imposing a short prison sentence–which neither side asked for–both parties, and their respective stakeholders, may feel that justice was denied!  It is very rare indeed that both sides in a criminal case, and their respective stakeholders, will agree that justice was served.

Despite this conundrum, I believe that a fair systemic measure of justice-achieved or justice-denied is within our reach.  The solution is to look at the small picture instead of the big picture, focusing one-by-one on the participant groups and the processes they apply to handling cases in the criminal justice system, rather than the results of those cases.  It is my thesis that, in any criminal case, if all of the participants follow the correct processes fairly and without bias, it should be said that “justice was served,” but, if that does not occur, it should be said that “justice was denied.” The determination of whether justice prevailed should be made regardless of whether a defendant is convicted or acquitted, sentenced to probation or prison, and, in capital cases, given a life or death sentence.

To respond to the charge that the criminal justice system is racist, I will make an exception to the small-picture approach, rather than addressing that issue multiple times in the context of each participant group.  This issue will be the subject of my next posting on the Criminal Justice System.  In successive postings I will address, in turn, each participant group’s role and processes, separating fact from fiction, and reality from myth, whenever possible.

Unabashed Truthteller

Hi Mr. President:

I didn’t expect to be writing again so soon, but I saw a Wall Street Journal article announcing that Wells Fargo & Co. only reluctantly canceled plans to fete their top producing mortgage officers at two high-priced hotel casinos in Las Vegas, after receiving a $25 billion public funds bailout–this despite the public outcry that followed Citigroup’s attempted purchase of a luxury corporate jet soon after receiving a $45 billion bailout, and AIG’s spending almost a half million dollars on executive spas after receiving an $85 billion bailout.

What most surprises me is that all of the smart management people at Wells Fargo (and those other companies) didn’t realize that once a privately owned firm asks for public assistance, they shouldn’t act like they’ve got money to burn–at least until they’ve paid back the welfare grant.  Since these companies apparently don’t get the big picture,  someone has to explain things to them in very simplistic terms.  So here goes:

Let’s pretend that your brother calls one night and says he’s in desperate need of a $5,000 loan to pay his overdue bills, or his condo will be foreclosed and his car will be repossesed.  He explains that he made some bad investments, and lost all his savings.  Even though you have your own bills to pay and will need to tighten your belt to get by, you decide to help your brother out.  Your brother says it will take him three months to “get his head above water” and start trying to pay you back.  A week later, you see your brother and his unemployed girlfriend eating dinner in a very expensive restaraunt.  When you go in to say “hello” you notice that there’s also a very pricey bottle of wine on the table.  As you walk away, you realize that the three most likely explanations for your brother’s opulant meal are: (1) your brother lied to you about needing $5,000 to pay his bills; (2) your brother needed the money to pay bills but decided to celebrate getting the loan first, and worry about paying his bills later; or (3) your brother used the full $5,000 to pay his bills, but then decided to spend his earnings on a really expensive meal rather than starting to pay you back.

I think we all can agree that no matter which scenario explains  your brother’s behavior, you’d be really pissed off and want to beat him to a pulp.  Would it make you feel better if your brother said, “Look I put your $5,000 in a separate bank account, and used my payroll check to pay for the extravagant meal!”  If that doesn’t help, how about if he said, “I’ve really spoiled my girlfriend with expensive gifts and meals, and I was afraid that she would leave me if I stopped spoiling her.”  I don’t think so!!!

I hope this modest parable gets the point across to these captains of finance.  If they used bailout funds for those extravagances, shame on them!  If they put the bailout funds aside and used other revenue or savings, then perhaps they didn’t need the bailout funds after all, and shame on them!  And if their top managers or earners were threatening to go elsewhere for employment unless they received extravagant bonuses or entertainment, shame on the employees for being greedy during this national crisis and shame on the bosses for giving in their extortion.  As a wise Bloomberg columnist said on NPR, considering how poorly those firms performed last year the companies might be better off losing the benefit of their services.

Well, Mr. President, if you think my comments would help those financial institutions understand the big picture, I would encourage your staff to send the CEO’s and Boards of Directors a copy of this post, or an email with a link to this blog.

Respectfully,

Unabashed Truthteller

Dear Mr. President:

During your Inauguration speech you invited all Americans to participate in the massive undertaking of reviving our failed economy and healing our wounded national spirit.  l am not a financial expert, and am in no position to hire the unemployed or extend badly needed credit to distressed businesses, state and local governments, or families facing foreclosure.  Nor am I much of a cheerleader.  However, I am an observer of human nature and events, and I have decided to contribute to this undertaking by revealing truths about some issues that may be hindering your recovery efforts.  I will do so in a series of open letters, of which this is the first installment.

Let me start by addressing the first massive infusion of public “bailout” funds to certain investment banks and other financial institutions.  Congress directed the Treasury Department to purchase “troubled” (i.e., worthless) assets from those financial institutions, and earmarked billions of dollars for that purpose, in order to enable those institutions to perform their traditional roles as market makers and lenders.  But, as it turned out, Treasury didn’t buy “troubled” assets with that money.  Instead, the taxpayer funds were given directly to the faltering financial institutions whose risky (and, ultimately, disastrous) investment policies–motivated by an unending thirst for more wealth–were in large part responsible for the market crisis. Apparently, this unilateral action by Treasury was based on the theory that the the failing financial institutions whose reckless policies resulted in huge losses could be trusted to make the most appropriate use of public funds to undo the damage they had caused??!!!

This scenario is disturbing on a number of levels.  First, and perhaps most ironic, Mr. Paulson and the newly confirmed Treasury Secretary are reputed to be extremely bright and competent, so I can’t imagine they didn’t realize that the CEO’s and CFO’s of these financial institutions were the same persons who nodded in approval when their firms bought those worthless assets and sold them to their clients.  Do they believe that just because a Wall Street bigshot gets paid millions of dollars a year, wears $2,000 suits, owns multiple homes and flies around in corporate jets he (or she) can be trusted to run a financial institution in a responsible way?  Weren’t those Treasury officials around during Enron and World Com?  How can anyone be surprised that Merill Lynch’s former CEO spent over $1 million to have his office renovated soon after pleading for taxpayer funds to keep his firm from going bankrupt, or that Citigroup (another recipient of bailout funds) was about to buy a $50 million corporate jet?

On another level, Treasury’s conduct would seem to violate the common legal rule that a person who receives property belonging to another for the purpose of making a particular disposition of that property cannot unilaterally decide to dispose of the property contrary to the owner’s instructions.  If you gave your real estate agent 1.5 million to buy a house for you in Chicago, but she unilaterally decided that it would be a wiser use of your money to buy shares in an IPO, which promptly lost all of its value, you would be demanding her arrest in about 3 seconds. But it seems that the folks at Treasury who made the unilateral decision to disregard the statutory mandates for TARP have not only managed to avoid arrest , but are continuing to lead your economic recovery planning efforts.

On yet still another level, we learned earlier this week that, in addition to new corporate jets and swanky office redos, these poster boys of corporate irresponsibility rewarded their loyal employees, and in some cases themselves, with huge bonuses and executive compensation packages. At a Thursday photo op you called those bonuses “shameful” and “irresponsible.” That public statement was a good first step…but hopefully it will not be your last word on these matters.  If our nation’s economic crisis were, by analogy, compared to a state of war, then those reprehensible actions would be equivalent to providing aid to the enemy.  There is no doubt in my mind that most Americans would like to see the persons mentioned above suffer immediate, severe and public consequences for their actions, including prosecution for any violations of criminal law.

Though I hope otherwise, I fear that our current federal criminal laws might not cover the above actions by government officials and financial institution officers.  If I am  correct, that could explain why taxpayer funds are so often squandered by government agencies, contractors and vendors.  There’s very little downside to playing fast and loose with public funds if the players don’t have to fear prosecution.  If prosecution is not possible under our current laws, you might want to seek appropriate changes to the U.S. criminal code, because unless you do something radical to change the pigs-feeding-at-the-trough culture that surrounds the expenditure of federal funds I don’t foresee a positive outlook for your recovery plans in the near future.

Finally, in light of what happened with the first bailout fund, I will end this installment by stating my fervent hope that the bailout package now before Congress will include the following conditions and limitations:  (1) The Board of Directors of any financial institution that applies for taxpayer funds must be required to immediately fire for cause any officer who used funds from the first bailout to pay bonuses or increase executive compensation in any manner; (2) Such Board of Directors also must agree not to hire any person fired by another company because of the first condition (which will prevent a company from circumventing that condition by “firing” a wrongdoer but then arranging with another applicant to hire each others’ fired employees); and, since the alleged reason for the bailout is to encourage banks to extend credit, (3) The Boards of Directors must agree to use a designated portion of the taxpayer funds (to be specified by Treasury and not left to the firm’s discretion) for the sole purpose of extending loans under terms dictated by Treasury.

I’ll say goodbye, Mr. President, until my next installment.  In the meantime, we’ll all be watching your progress in these matters.

Respectfully,

Unabashed Truthteller.