This is a story of three rich crooks—Bernard Madoff, Leon Panetta and Tom Daschle—and the taxpayers that involuntarily made them rich. It may be jarring to see a despised criminal, Madoff, mentioned in the same sentence with Panetta and Daschle—who have been lionized as great public servants. But, as we look beyond appearances, we see that all three earned their wealth in similar ways.
Today the Wall Street Journal disclosed that Leon Panetta, Obama’s nominee for Director of the Central Intelligence Agency, “has earned more than $700,000 in speaking and consulting fees since the beginning of 2008, with some of the payments coming from troubled banks and an investment firm that owns companies that do business with federal national security agencies.” Panetta was the former chief of staff for Bill Clinton.
No doubt, as with the case of Tom Daschle, we will soon hear from politicians and their enablers in the media that Panetta is above reproach, that he is the gold standard in integrity, and that we must not lose his expertise in these troubled times.
Before Daschle’s nomination was withdrawn for secretary of Health and Human Services, Senator Kent Conrad said of him, “I don’t know anyone more honorable, more decent, more honest and more qualified for this position.” But Kenneth Vogel writing in Politico observes:
Daschle made nearly $5.3 million in the last two years, records released Friday show, including $220,000 he received for giving speeches, many of them to outfits that stand to gain or lose millions of dollars from the work he would do once confirmed as secretary of Health and Human Services.
For instance, the Health Industry Distributors Association plunked down $14,000 to land the former Senate Democratic leader in March 2008. The association, which represents medical products distributors, boasts on its website that Daschle met with it after he was nominated to discuss “the impact an Obama administration will have on the industry.”
According to the New York Times, Daschle took “on an array of clients seeking influence with the government, including concerns involved in Indian gambling, ethanol, health care, telecommunications and federal contracting.”
Does anybody really believe that Panetta and Daschle were being paid for their brilliant insights and oratory? They were paid large sums for their access. I remember when such people were disparagingly called influence peddlers. Let me may make it simpler—influence peddlers are crooks.
As for Madoff, we learned yesterday from Harry Markopolos, a financial fraud investigator, that he had warned the Securities and Exchange Commission (SEC) for almost nine years that Bernard Madoff was perpetrating fraud. In Markopolos’s assessment, presented at a Congressional hearing, “the regulatory agency that oversees financial markets is inept, ‘financially illiterate,’ and far too cozy with the financial titans it is supposed to be regulating.”
Markopolos pointedly said, “The SEC is also captive to the industry it regulates and it is afraid of bringing big cases against the largest most powerful firms. Cleary the SEC was afraid of Mr. Madoff.” Because he was a very powerful man, the SEC refused to act and $50 billion was stolen from the public by Madoff. To add salt to the wounds, taxpayers were forced to spend billions to fund the SEC; yet the SEC refused to do its most basic job of preventing fraud.
Let me pose this question: When you turn on your lamp at night, do you fear being electrocuted? Of course not! You trust Underwriters Laboratory and their UL symbol. Would UL certify faulty lamps because they were scared of the CEO of the company whose lamps they were testing? Of course they wouldn’t. They would be out of business at the first hint of any scandal. This is in stark contrast to the SEC. For the job they have already failed to do, the SEC will now argue that they need more money for fraud protection.
There are only two ways to make money. You can earn it honestly by providing a good or service that an individual or firm is willing to pay for. Or you can steal the money. There are many ways to steal money. Among them are being a street thug, being a white-collar criminal like Madoff, or utilizing legal theft which takes the form of the government coercing money out of unwilling taxpayers.
Let’s be clear, the organizations that paid Panetta and Daschle many millions of dollars paid them because it was a good investment. In return, those organizations expect the government to hand them far more money squeezed out of taxpayers. Panetta and Daschle would never have been hired otherwise.
What drove these three crooks to their crimes against the American people? One can only speculate: perhaps a sense that they were doing no wrong (Madoff probably expected to find some way to pay the money back and Panetta and Daschle thought that’s the way the system works), perhaps a sense of entitlement (for all of their hard work), or perhaps a strong dose of hubris (that they would never be caught).
You may think this is strong language I’m using. We are at a crucial point in American history and shock therapy is necessary. To be sure Daschle and Panetta are petty crooks in comparison to Madoff; but until the American public begins to understand that they were ripped off by all three, as well as the SEC, our problems will remain difficult to solve. In that way—if his story opens some eyes—Daschle may be the dedicated public servant that some claim him to be.