Well, it’s about time somebody got to the bottom of this.
The Wall Street Journal reports: “Federal regulators are using powers they gained in the Dodd-Frank financial overhaul law to ramp up an inquiry into the recent trading blunders at J.P. Morgan Chase.” How dare a private company lose $2 billion. Losing money, after all, ought to be restricted to the federal government.
A list of failed government “investments” would fill a book. But a handful of examples should make the point.
• The Obama administration has “handed out $2.4 billion in grants to the electric-vehicle sector, as well as nearly $2.6 billion in loans,” journalist Robert Bryce reports. But automakers can’t unload those cars; Nissan sold a mere 1,800 all-electric Leafs in the first quarter, while GM has twice stopped production of its poor-selling Volt.
• First Solar has received $1.46 billion in loan guarantees. Yet it announced in April that it will lay off another 2,000 employees, after letting 100 go last year.
• Solyndra pocketed $535 million in loan guarantees, then went bankrupt last year.
Heritage Action for America is keeping a running list “of all the clean energy companies supported by President Obama’s stimulus that are now failing or have filed for bankruptcy.” That list is up to 19. Even the mainstream media is covering the waste. In January, “CBS News counted 12 clean energy companies that are having trouble after collectively being approved for more than $6.5 billion in federal assistance.”
Of course, the federal government wastes taxpayer money in more traditional ways.
There was the 2010 General Services Administration convention in Las Vegas. Taxpayers kicked in some $800,000 so federal employees could enjoy “a conference off the Las Vegas Strip that featured a clown, a mind reader and a $31,208 reception,” The Washington Post reported.
Many federal employees have engaged in credit-card fraud on our dime. A 2008 investigation showed that “Federal employees charged millions of dollars for Internet dating, tailor-made suits, lingerie, lavish dinners and other questionable expenses to their government credit cards over a 15-month period.”
The investigation also revealed that employees often ignored the rules. “The review of card spending at more than a dozen departments from 2005 to 2006 found that nearly 41 percent of roughly $14 billion in credit-card purchases, whether legitimate or questionable, did not follow procedure — either because they were not properly authorized or they had not been signed for by an independent third party as called for in federal rules to deter fraud.”
Imagine what would happen if a private business tried to ignore the IRS’s stringent card regulations. But federal employees ignored the rules four times out of 10.
So has the federal government cleaned up its act? Not yet. “Federal employees who use government-issued charge cards may soon face regular credit checks, strict limitations on purchases and regular reviews to see if they still need the card,” The Post reported last fall, three years after the big investigation. The bill hasn’t passed the House.
However, Congress has indeed “done something” to crack down on private companies. In 2010 it passed the aforementioned Dodd-Frank Bill, which tipped the scales at roughly 850 pages. The Economist calls it “too big not to fail.” Perhaps the biggest problem with this big bill is that, two years on, we still don’t know what it does, because Congress essentially (and unconstitutionally) handed over much of its lawmaking power to unelected bureaucrats.
The law firm Davis Polk is tracking how those regulators are doing. “As of May 1, 2012, a total of 221 Dodd-Frank rulemaking requirement deadlines have passed. Of these 221 passed deadlines, 148 (67 percent) have been missed and 73 (33 percent) have been met with finalized rules,” it reports. This is no way to regulate an economy.
The federal government clearly can’t oversee itself, as evidenced by the massive scale of waste, fraud and abuse carried out by its own employees. So why would anyone think it should be micromanaging private, for-profit corporations?
At least when people in private companies lose money, they’re responsible to their shareholders. For example, Bloomberg reported that JP Morgan, “will consider reclaiming incentive pay from employees including former Chief Investment Officer Ina Drew after her unit had a $2 billion trading loss.” When the federal government wastes our tax money, it’s seldom held responsible.
The answer is a smaller, more efficient government that focuses on its core responsibilities and allows private industry the space to create jobs and do business.