Rolf Henel: Is it just me, or is more regulation needed?

(The opinions expressed on this page are not necessarily those of the New Hampshire Journal. The Journal welcomes opinions on all sides of issues and from all candidates for office.)

 

By ROLF H. HENEL

 

I don’t want to come across as some sort of Victorian crusader, but I am increasingly disturbed by reports of wide spread scams and blatantly illegal activities that are conducted by companies and individuals alike.

 
Is this a sign of increasing decadence and hence our ultimate failure to function as a society? It seems that breaking the law and cheating others is no longer an act of immorality but rather – if anything – a sign of achievement and success. There are constant cries of excessive regulation when in fact you hear more and more about all kinds of fraud – many on a huge scale – that would lead you to think we need more regulation, not less.

 
Here is a list of some of the scams that memory brings to mind:

 
• Bernie Madoff (at least he was finally caught and punished). But there are dozens of other Ponzi schemes, many of them ripping off retirees, stealing their life-time savings. Greed makes people vulnerable especially in an age of near zero interest rates on savings.

 
• Bank fraud – committed by large both foreign and domestic (“too big to fail”) money center banks – mortgage fraud, who foment money laundering, assist enemy countries (e.g. Iran, Russia) in circumventing government mandated money transfer restrictions, etc . While sometimes punished the fine is minor – even when in the billions – compare to the overall gain. Those responsible are not charged with criminal acts and thus go free to do it again and again while claiming to be great patriots.

 
• From bank fraud to securities fraud is just a short walk across Wall Street. The U.S. has a long history of securities fraud of all kinds. One can argue that prior to the establishment of the SEC in 1933 it was even worse than today if measured in the purchasing power of the ill-gotten gains. However, today there are many more types of securities, many of them invented during the boom that led up to the crash of 2008 and many of them designed to escape the watchful eyes and even the authority of the enforcement agencies. Among the latest scandals are the three rating agencies who had been considered the epitome of honesty and reliability. As it turns out, not so. But that should not have come as a surprise. The rating agencies are paid directly by the companies whose securities (usually bonds) they rate. So obviously you will err on the side of leniency in judging creditworthiness. In the case of Standard & Poors, which offers much broader services than the other two, one has to wonder to what extent have their ubiquitous stock as well as bond reports been tainted by the desire to be Mr. Nice Guy to everyone. Hopefully, Morningstar that rates funds has not fallen prey to the same temptation. They shouldn’t as they are funded by subscribers, and not the issuers.

 
• Now another great American industry – the automakers — is in the dog house for not reporting (leave alone correcting) serious flaws in some of the cars they make. Our unbridled faith in everything American, however, is unscathed as foreign manufactures – like the Japanese and the Koreans – have been bad boys too. The problem is that while accidents – sometimes fatal – go unreported and uncorrected more and more people get injured or killed. Cynics say that the high cost of recalling millions upon millions of vehicles is more than compensated by the owners while waiting around at the dealer’s service center seeing a new car that they land up buying. Good deal(er).
• Continuous and intentional false labeling of food and dietary supplements – Wal-Mart, Walgreen, Target et al. Not to mention false and unsubstantiated health claims. The FDA has been told – by law – to stay out of this category. So much for consumer protection.

 
• Health care fraud – by presumably respectable physicians, surgeons, medical diagnostic and testing labs, and hospitals. Florida particularly has been in the limelight recently, but it is all over the country. Swindling insurers – particularly Medicare and Medicaid – is common practice. Charging for services and procedures not rendered or not necessary, likewise. Sometimes even the patient is fictitious. Private patients, many of whom are indigent and without health coverage and thus among those who can least afford the costs, are often grossly overcharged. And then private insurers are often guilty themselves of gouging their policy holders. Much of the criticism of the Affordable Care Act (the ACA – AKA “Obamacare”) is motivated by companies under greater scrutiny than before curtailing their ability to cheat.

 
• Corrupt politics and politicians – the latest being NY Assembly speaker Sheldon Silver –but there are many, many more that are on the take – all over the country and on all levels of government. Corrupting politicians is now fair game and legal thanks to the Supreme Court’s Citizens United decision. For sale signs outside “elected” officials’ offices are now even more prominent. One man one vote no longer is the mainstay of our principles of democracy. Rather money does the trick. Elected officials are not really elected – they are bought and beholden to their benefactors, e.g. the gun lobby. Koch brothers, Abelson are just two other – but major – examples. We have become a plutocratic, kleptocractic, narcissistic society: “What’s good is what’s good for me.” Lobbyists are now a major part of our government, attracting some of the countries brightest ex-military and ex-civil servants, lawyers and much money. Even foreign governments, e.g. Saudi Arabia, bribe our lawmakers. The result not infrequently is a government that is not of the people, by the people or for the people but against the people – American people.

 
• And finally, and perhaps the worst kind of corruption, are the incredible plots and events leading up to and following on 9/11 and the cover-up of the 9-11 Commission investigation into Saudi (read: sorry) influence over US policy. Bush, Cheney, Wolfowitz et al have never been brought to justice for their treasonous acts and lies. In fact, there has been very little outcry over one of the most heinous violations of public interest in the history of the United States. These violations resulted in the death of thousands, lasting injury of many more and immense cost in humanitarian and monetary terms.

 
So the next time you hear of someone complain about “excessive regulation” maybe that person has something to worry about – namely being caught or restrained from fraudulent activity.

 

(Rolf H. Henel is the former president of American Cyanamid, Cyanamid International, Lederle Division.)

 

Author: Staff Reporter

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  • Christopher Babick

    Regulations are put in place and ignored. Or, they are watered down to the point of being useless. Fraud is the elephant in the middle of the room. No one likes to acknowledge it. That is, until it affects us personally, or as a nation. Great article.