Felicia Muftic – Who’s watching the watchers?
July 5, 2009
So you thought there were laws that protected you from fraud and deception and kept your food and air safe. You are right – there are laws, but since the 1980s many of those laws have been sabotaged by the regulators, enforcers, and funders under the banner of keeping government off the backs of business.
Most of this happens under the radar and we do not wake up until we hear of investors losing billions to ponzi schemes and monthly we are warned not to eat certain food because of contamination, or we are hoodwinked into debt because of lies and fine print. Here’s why: Regulatory agencies and government bureaucrats charged with applying the laws interpret, enforce, ignore, underspend and direct staffing to change whether or if laws work as intended.
Bernie Madoff was sentenced to 150 years behind bars last week and the question on the tip of everyone’s tongue was “how could he have gotten away with billions in securities fraud for so long?” Ten years ago there were those who notified the agency in charge of securities regulation, the Securities and Exchange Commission. Yet even after numerous SEC examinations, Madoff was given a clean bill of health. His own sons finally blew the whistle.
General consensus seems to be that the SEC was underfunded and understaffed. The staff it had was not well trained and they were paid one fourth of what those they regulated got as salaries. It is assumed they were tempted to seek employment later with those they regulated. No one cared; the economy was roaring; the philosophy was the less regulation and enforcement, the better it was for capitalism.
Another case in point this spring was salmonella-infected peanuts. An understaffed, underfunded Georgia agency had not made the rounds. The state of Georgia had 60 inspectors to police 16,000 food handling businesses. Eight people died.
Since the Reagan era, independent agencies such as the Food and Drug Administration have seen funding cut. By January 2008, a Congressional oversight committee concluded “the FDA can no longer fulfill its mission without substantial and sustained annual appropriations” due to a lack of skilled and adequate staffing. Yet the FDA is charged with looking out after the safety of drugs and the food we eat.
The result: This spring we have a been hearing about a rash of recalls and deadly side effects of drugs and over the counter medications previously approved by the FDA as safe. Political appointees to boards, commissions, and administration can and have crippled agencies and laws. George W. Bush made appointments to agencies his appointees wanted to abolish, or constrain, such as the Department of Education, the EPA, and the United Nations.
I will never forget a call I got early in the Reagan administration from a friend of mine, a lawyer with the chemical industry as a client, who was vetting a potential presidential nominee to head the Environmental Protection Agency. He wanted to know if such and such a candidate would be friendly to his client. The candidate was a Colorado state legislator, Anne Gorsuch (later Burford). I knew her voting record. I told him his client would be very happy. I was prophetic.
Lead in gasoline as a policy was decided in favor of the oil industry under her aegis. Also, under her leadership, the EPA’s budget dropped by $200 million and staff was slashed 23 percent. A flap concerning chemical contamination subject to superfund toxic waste cleanup finally led to her resignation. Gorsuch-Burford was found in contempt of Congress after refusing to disclose documents related to a conflict of interest involving the Superfund program.
Most regulatory agencies at the state and federal levels have a governing body of appointees. Several years ago, as part of my duties with a consumer credit counseling agency, I monitored the Colorado Collection Agency Board that was charged with disciplining collection agencies that violated rules. I was appalled when a Democratic elected official appointed the owner of the collection agency with the most complaints on record to chair the board.
These are not isolated examples. In fact, most state regulatory boards are staffed by a majority of members who come from the industry they are supposed to regulate. They may have consumer or public representatives, but they are often picked for their moderation, or lack of assertiveness or knowledge. The foxes are guarding the hen house.
Watch carefully how the health care reform legislation going through Congress is structured. Most likely there will be some sort of an agency or board established to oversee the running of the insurance portion of the plan since government funds will be utilized to subsidize the policies of the uninsured. Whether there is a government funded option, subsidizing of private insurers, or a co-op form of administration, the make-up of the governing body will be very important for consumers. It would be a sad day if the insurance industry and medical service providers dominated that body.
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