by Bill Bradley
4. The increase in leverage. This occurred on George W. Bush’s watch. In 2004, financial institutions, no longer satisfied with selling the same asset four times, wanted to turbocharge their returns, so they petitioned the Securities & Exchange Commission to allow them to increase what they could borrow for a trade from ten times their capital to thirty or forty times. Warren Buffett has said that leverage is “like driving a car down the road and placing a dagger on the steering wheel pointed at your heart.”11 Everything goes fine until you slam on the brakes. In 2008, the brakes brought the economy to a screeching halt as the speculative frenzy produced a near-death experience for the global economy. Thanks to the government (i.e., taxpayer) underwriting, the dagger didn’t reach the heart of the drivers, who were “too big to fail.” It was the hapless passengers in the backseat who got hurt—and they didn’t even know who was driving the car or how recklessly it was being driven. They just rolled out onto the street to find their houses underwater and their retirement in peril. The quotable Chuck Prince commented about the leveraged lending practices of Citi: “As long as the music is playing, you’ve got to get up and dance,” he told the Financial Times back in July 2007. “We’re still dancing.”12
5. The Federal Reserve’s demurral. Underlying and abetting the four mistakes listed above was the Fed’s ideological view that it had no responsibility for asset inflation, be it a stock market fueled on cheap credit or a housing bubble. Unlike William McChesney Martin Jr., the Fed chairman from 1951 to 1970, who said that his job was to “take away the punch bowl as the party gets going,” Alan Greenspan cheered the party on by keeping interest rates near zero.13 Who couldn’t make money by borrowing at near zero and investing the money in practically anything? And that was before you were permitted to borrow thirty times your capital. Noted financial economist Henry Kaufman likens the proper relationship between the Federal Reserve and banks to that of parent and child: “As guardian, the parents’ role is to set out standards of behavior and hold the child to them. A parent should not play the role of friend in his or her relationship with the child. Similarly, the central bank should define and enforce standards of behavior. It should never become a folk hero of the marketplace.”14
The financial crisis of 2008–2009 was caused by these specific policy blunders, which benefited a few in the financial world, even as they undermined the financial stability essential for economic growth and raising standards of living. Middle-class Americans participated in this fiasco by borrowing money for homes and consumer goods they couldn’t afford. But their recklessness was encouraged by liberal credit—and, of course, by the mortgage industry, which gave them mortgages beyond their means because the banks got paid for selling mortgages, not for making sure they were repaid. Besides, the dicey mortgages would probably end up in the coffers of Fannie or Freddie. Your taxpayer dollars at work.
The question asked was never “What is right?” The operative question was “Can I get away with it?” That attitude is symptomatic of the wider cultural norm, which holds that if it’s legal, it’s OK. If you’ve ever seen the power of special interests at work in the writing of laws, you know that that’s not the right answer.
The Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 was supposed to prevent another financial meltdown. Instead it risked turning the financial sector into a government monolith. The bill punted on breaking up the too-big-to-fail banks. Far from it, Dodd-Frank bolstered them against failure and encased the whole thing in a four-hundred-thousand-word web of complexity that will serve as a full employment act for many members of the Washington club. The act provided for an orderly dissolution when a too-big-to-fail institution got into real trouble. But no one knows how orderly dissolution will work. As Henry Kaufman pointed out in a speech to the Foreign Policy Association on December 6, 2011, “Untangling these credit relationships will affect prices and other market relationships. Who will take the losses? Who will take over the assets and liabilities as the dissolution proceeds? . . . [A] good portion of the assets and liabilities will be acquired by other institutions that are themselves deemed too big to fail. . . . Either way, the entire process will increase financial concentration.” There is only one answer to this dilemma: Shrink the big financial institutions. You could spin off the credit-card and consumer-loan divisions into a new company. You could do the same with the mortgage division or the insurance division. You could even put the investment banking and trading operation in a new company. After these behemoths have been downsized, they will no longer be a systemic risk. Small businesses will find easier financing. Conflicts of interest will end. Large corporations will no longer receive a privileged flow of funds. The economy will be more resilient and more stable. The only thing preventing this outcome is the role of money in politics.
There are ways to keep our sclerotic democracy from succumbing to the corruption of money. A constitutional amendment, stating that federal, state, and local governments can limit the total amount of money spent in a political campaign, should supersede Buckley and Citizens United. If that were combined with public financing for whatever amount was permitted by the campaign finance laws, we would have returned government to the people. The second way (either as a part of the constitutional amendment process or in a freestanding bill) is to establish public financing for all congressional and senatorial campaigns. For roughly $3 billion a year out of a $3.5 trillion budget, we could shut special interests out of the legislative process entirely, and then legislation would be influenced more by argument and facts than by dollars. Absent the constitutional amendment, a candidate’s acceptance of public financing would have to be voluntary. A wealthy candidate, not wishing to limit his spending, could always opt out of receiving public money, but his opponent would be assured enough money to make his case without begging the special interests for it. I know plenty of members of Congress who would rather not spend three hours a day calling strangers for money, but in a catch-22 they’re afraid to support public-financing legislation for future elections because this might offend the interests, who then wouldn’t contribute to the member’s campaign in the pending election. Obama’s failure to put campaign finance reform front and center in the first months of his presidency makes it more difficult than ever to achieve today.
Beyond the legislative route to diminish the role of money in politics lies the judicial one. People could flood the courts with cases that take the logic of Citizens United to its absurd conclusion. The Supreme Court based its decision on the theory that a corporation is a person—an idea that arose not with our Founders but with the robber barons’ court of the late nineteenth century in Santa Clara County vs. Southern Pacific Railroad Company, which dealt with the railroad’s claim to its right to due process. According to the theory dusted off by the Court in Citizens United, a corporation can’t be denied its right to free speech since it’s legally a person. The absurdity of the ruling is made manifest if one asks, “When was the last time you saw a corporation get married?” or, better yet, “go to jail?” But for corporations there’s a downside to being labeled a person. Might the executives of BP, for instance, be charged with murder because, through their position and their neglect, eleven people died in the explosion of the Deepwater Horizon?
When members no longer have to beg for special-interest money, Congress’s time could be spent on passing legislation. The reforms I’ve suggested would build into the structure of politics a force against special-interest deals. When legislators don’t have to spend time raising money, they’ll have more time to study the issues and talk to their constituents. Evenhanded laws will pass, making America a better country. Politics will once again be a vehicle to improve people’s lives—and people will feel the change. Their voices will be heard, online and in person. Their confidence in their own power and their trust in the power of government will grow. And our democracy will be strengthened.
5
Celebrating Selflessness
Ther
e’s a common conception that human beings are basically selfish. One major political party says that the state must limit the effects of this inherent selfishness through laws and government regulation. The other says that our inherent selfishness can be controlled through the functioning of the free market, which maximizes individual freedom and encourages the rational weighing of costs and benefits, making self-interest mutually advantageous and helping everyone in the long run. What if each of these views proceeded from the wrong assumption—that people are basically selfish? What if, given a choice, most people would prefer to be unselfish—to cooperate, to help others, to work in teams? Might not that new way be the key to our future? One unselfish act is like a large rock tossed into a pond, with the ripples reaching the farthest shore.
In 2004, the president of Sirius Satellite Radio, Scott Greenstein, visited me. Over lunch he explained how disappointed he was by the lack of neutral voices in American politics. The presidential election of that year was just getting under way, and to him it seemed that each side gave the public nothing but spin. Wouldn’t it be great, he said, if someone could just tell the public the truth about the vast scope of our problems and what we’d have to do to solve them. Greenstein asked me if I wanted to do that kind of show on his network. I thought for a moment and replied that such a show interested me, but that I’d rather do one that allowed my listeners to hear the kind of stories from people that I’d heard during my forty years on the road, both as a basketball player and a politician. The deeper truth about America lies in the humanity of its people; I didn’t want to do just another program on politics. Through the words of Americans themselves, I hoped to present a new perspective on the potential for a government “of, by, and for the people.”
The show is called American Voices (and I’m happy to say it’s still going on). Usually I interview someone who has an unusual job—a boat pilot on the Columbia River, a window washer who works on New York skyscrapers, a groundskeeper at Boston’s Fenway Park, a public-health nurse in the Aleutian Islands. Their stories convey the dignity of work, the insights people gain from what they do, and the satisfaction of a job well done. On every show, I also interview someone who is doing something selfless in his or her community. I interviewed Albert Lexie, a man who had shined shoes at the Children’s Hospital of Pittsburgh for forty-six years and put a portion of every tip he received into a fund to pay the medical bills of children from poor families. As of the day I interviewed him, he had put more than $100,000 into that fund.
Back when I was running for president, I would often say that this kind of story reflected the goodness of the American people, their generosity, flexibility, and unselfishness. I still believe that. When I began to look in earnest for similar stories for the show, they were easy to find. In fact, they flooded in: There’s Carolyn Manning, a woman in Phoenix who collects from local charities the names and addresses of new refugees in her area who have fled oppression somewhere in the world—Bosnia, Iraq, Sudan. Someone from Carolyn’s organization, Welcome to America, meets with them to make a list of what they need. Manning then pays them a visit. When the door opens, she says, “Welcome to America,” often giving the new arrivals such things as a full set of linens and china. Frequently the families are taken aback. They come from places where the only people you can trust are members of your ethnic group or tribe, never a stranger. Yet here is this woman asking for nothing, just giving. It makes a profound impression. When she says, “Welcome to America,” it’s not unusual for them to break into tears.
We’re a stronger society in the long run if we help those who have fallen on hard times, so they can pick themselves up and move on. On one show, I talked with Thomas Weller, who drives the freeways around San Diego in a souped-up station wagon filled with tires and engine-repair equipment. When he sees people stranded alongside the road, he pulls up and helps them fix their car at no charge. I asked him to tell me about a memorable episode on the road. He said that one day he’d come to a particularly dangerous stretch of freeway and saw a family precariously crowded on the narrow shoulder behind their abandoned car. He pulled over, discovered quickly that they spoke no English, and motioned for them to take shelter behind the pillar of a nearby overpass. He somehow managed to make them understand that he’d come back with his equipment and help them. He returned about thirty minutes later, and when he came around the bend he saw that the family was still huddled behind the pillar but their car, which apparently had been hit by another car, was in flames. “Well, I guess I made a difference that day,” he said.
I asked him how he got started driving the roads and helping people. He said that one snowy winter night when he was sixteen and living in Illinois, he was driving alone along a rural road and his car slid off into a snow bank. The motor died and the car was stuck. It got colder and colder. He began to worry. At that moment, a car pulled up. “What’s the problem?” the driver asked, and offered to take him to the nearest town, which was fifteen miles away. When the Good Samaritan dropped him off, the boy said he’d like to do something in return, but the stranger wouldn’t hear of it. When the boy persisted, he said, “Well, there is one thing you can do for me.”
“What’s that?”
“Pass on the favor.”
“So,” the patroller of the San Diego freeways told me, “that’s what I’ve tried to do for the past twenty-two years.”
Personal experience is life’s best teacher. Sometimes it can produce lessons that reverberate out into the larger world. I interviewed Randy Lewis, a Walgreens drugstore executive who ran one of the company’s six regional supply centers. Inspired by his autistic son, he asked the Walgreens board for permission to staff 30 percent of his workforce with disabled people. They agreed, and after he had hired people with autism, cerebral palsy, and Down syndrome, he found that productivity improved. For one thing, he said, autistic people do a better job of, say, moving boxes from place to place, because they tend to focus more intensely on repetitive action. What he hadn’t expected was the effect that his decision had on the rest of his employees, who were proud of what hiring the disabled said about their company’s values.
The 1990 Americans with Disabilities Act removed barriers to disabled people’s participation in the daily activities of life, mandating such things as curb ramps, toilet grab bars, and wheelchair lifts on buses. What the act also did was to irrevocably change a national direction. Sometimes after passage of a direction-shifting law it is necessary to aggressively enforce it. (Think civil rights here; the Justice Department filed suits against restaurants that continued to discriminate, or school districts that refused to desegregate.) But after a while, people’s values impel them to go further than what the law requires—to its spirit, the dream it embodies. The Walgreens executive didn’t need a law: He had his own personal relationship with disability; the law simply created a framework that allowed his request to be taken seriously. In this way, government can encourage people to act from the deeper impulses of love.
Sometimes when we overcome adversity, the experience allows us to find ourselves and guides us to what we really want to do with our life. Molly Barker, a North Carolinian and longtime runner, came from a family with a history of drinking problems. In her twenties and early thirties she seemed headed in the same direction. Then one day at age thirty-two, she went out for a run. She reached a point in the course when her head cleared, and she felt the endorphins flow and the calm descend. After the run, she vowed that she wanted to feel every day, all day, as she had felt on that run. She managed to give up drinking and started a group called Girls on the Run, which aims to show middle-school girls from eight to eleven years old, through running, the spontaneous power they have within, before society can squelch it. In one of Molly’s groups was a girl named Brittany. She was mute. She spoke volumes with her eyes and her smile, but never uttered a word. Molly made some inquiries and discovered that Brittany could speak but never did. She had been severely and frequently beaten as a youn
g child. On the last day of the twelve-week course and after each of them had finished a 5K, Molly asked all the girls to describe their experience in Girls on the Run. “Awesome,” said one. “Beautiful,” said another. “Fun,” said another. When it was Brittany’s turn, she couldn’t say anything. Molly was disappointed.
The next day the group held its appreciation banquet, at which the girls were given various awards. Brittany was called to the stage to get the Grand Communicator Award. As she took the trophy she pulled out a handwritten card and gave it to Molly, who read it to herself and then asked Brittany if she would like to read the card to her teammates. Brittany stepped to the microphone, held the card tightly with both hands, squinched up her eyes and then opened them and looked out at her teammates for what seemed like an eternity. Then she said, “The word I wanted to say on my last day out with Girls on the Run is love.” The girls and their families rose in unison and gave her a standing ovation.
When the spirit leads us to take selfless action on behalf of another person, we are expressing our deepest humanity, and that impulse emerges, often, in unforeseen places for unpredictable reasons. I interviewed Linda Bremner, a woman living outside Chicago, whose eleven-year-old son, Andy, had contracted terminal cancer. While Andy was being treated in the hospital, he got a lot of letters from family and friends, but when he came home, the letters stopped. He asked his mother one day, “Mom, have people stopped sending me letters because they know I’m going to die?”
“No, of course not,” his mother said. “You’ll get more letters, I’m sure.” The next day, she started writing him letters signed “A secret pal.” If he had a bad week and had to stay home, she’d send him three letters; on a good week, when he attended school, she’d send him one. One night she came into the kitchen and saw him writing something. She tried to look at the piece of paper, but he pulled it away and asked her for an envelope. When she gave it to him, he stuffed his letter into it and asked her to deliver it to his “secret pal.” She started to open it, and he said, “No, not you, Mom. Give it to my secret pal.” After he’d gone to bed, though, she opened the letter. There was only one sentence. It read, “I love you, Mom.”
