Corporate Accountability

Chevron's "Crude" Attempt to Suppress Free Speech

Bill Moyers — Sun, 16 May 2010 23:31:51 -0400

With Michael Winship

Even as headlines and broadcast news are dominated by BP's fire-ravaged, sunken offshore rig and the ruptured well gushing a reported 210,000 gallons of oil per day into the Gulf of Mexico, there's another important story involving Big Oil and pollution -- one that shatters not only the environment but the essential First Amendment right of journalists to tell truth and shame the devil.

(Have you read, by the way, that after the surviving, dazed and frightened workers were evacuated from that burning platform, they were met by lawyers from the drilling giant Transocean with forms to sign stating they had not been injured and had no firsthand knowledge of what had happened?! So much for the corporate soul.)

But our story is about another petrochemical giant -- Chevron -- and a major threat to independent journalism. In New York last Thursday, Federal Judge Lewis A. Kaplan ordered documentary producer and director Joe Berlinger to turn over to Chevron more than 600 hours of raw footage used to create a film titled "Crude: The Real Price of Oil."

Released last year, it's the story of how 30,000 Ecuadorians rose up to challenge the pollution of their bodies, livestock, rivers and wells from Texaco's drilling for oil there, a rainforest disaster that has been described as the Amazon's Chernobyl. When Chevron acquired Texaco in 2001 and attempted to dismiss claims that it was now responsible, the indigenous people and their lawyers fought back in court.

Some of the issues and nuances of Berlinger's case are admittedly complex, but they all boil down to this: Chevron is trying to avoid responsibility and hopes to find in the unused footage -- material the filmmaker did not utilize in the final version of his documentary -- evidence helpful to the company in fending off potential damages of $27.3 billion.

This is a serious matter for reporters, filmmakers and frankly, everyone else. Tough, investigative reporting without fear or favor -- already under siege by severe cutbacks and the shutdown of newspapers and other media outlets -- is vital to the public awareness and understanding essential to a democracy. As Michael Moore put it, "The chilling effect of this is, [to] someone like me, if something like this is upheld, the next whistleblower at the next corporation is going to think twice about showing me some documents if that information has to be turned over to the corporation that they're working for."

In an open letter on Joe Berlinger's behalf, signed by many in the non-fiction film business (including the two of us), the Independent Documentary Association described Chevron's case as a "fishing expedition" and wrote that, "At the heart of journalism lies the trust between the interviewer and his or her subject. Individuals who agree to be interviewed by the news media are often putting themselves at great risk, especially in the case of television news and documentary film where the subject's identity and voice are presented in the final report.

"If witnesses sense that their entire interviews will be scrutinized by attorneys and examined in courtrooms they will undoubtedly speak less freely. This ruling surely will have a crippling effect on the work of investigative journalists everywhere, should it stand."

Just so. With certain exceptions, the courts have considered outtakes of a film to be the equivalent of a reporter's notebook, to be shielded from the scrutiny of others. If we -- reporters, journalists, filmmakers -- are required to turn research, transcripts and outtakes over to a government or a corporation -- or to one party in a lawsuit -- the whole integrity of the process of journalism is in jeopardy; no one will talk to us.

In his decision, Judge Kaplan wrote that, "Review of Berlinger's outtakes will contribute to the goal of seeing not only that justice is done, but that it appears to be done." He also quoted former Supreme Court Justice Louis D. Brandeis' famous maxim that "sunlight is said to be the best of disinfectants."

There is an irony to this, noted by Frank Smyth of the Committee to Protect Journalists. Brandeis "made his famous sunlight statement about the need to expose bankers and investors who controlled 'money trusts' to stifle competition, and he later railed against not only powerful corporations but the lawyers and other members of the bar who worked to perpetuate their power."

In a 1905 speech before the Harvard Ethical Society, Brandeis said, "Instead of holding a position of independence, between the wealthy and the people, prepared to curb the excesses of either, able lawyers have, to a large extent, allowed themselves to become adjuncts of great corporations and have neglected the obligation to use their powers for the protection of the people."

Now, more than a century later, Chevron, the third largest corporation in America, according to Forbes magazine, has hauled out their lawyers in a case that would undermine the right of journalists to protect the people by telling them the truth. Joe Berlinger and his legal team have asked Judge Kaplan to suspend his order pending an appeal to the United States Court of Appeals for the Second Circuit.

As the Independent Documentary Association asserts, "This case offers a clear and compelling argument for more vigorous federal shield laws to protect journalists and their work, better federal laws to protect confidential sources, and stronger standards to prevent entities from piercing the journalists' privilege. We urge the higher courts to overturn this ruling to help ensure the safety and protection of journalists and their subjects, and to promote a free and vital press in our nation and around the world."

Bill Moyers is president of the Schumann Center for Media and Democracy. Michael Winship is president of the Writers Guild of America, East. Rebecca Wharton conducted original research for this article.

Tax Audits: IRS Gives Big Corporations a Pass

Eric Lotke — Mon, 12 Apr 2010 13:06:33 -0400

Big corporations still get away with it. A stunning new analysis by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University shows how the IRS targets smaller corporations, while larger corporations that would yield more unpaid tax dollars go unaudited.

It’s worth reading the whole thing, but I share some highlights:

1. Among corporations with assets over $250 million, the IRS reduced the number of audits by 22 percent and the number of hours spent auditing by 33 percent between 2005 and 2009. In an era of high deficits and higher concern over corporate malfeasance, there are no excuses. Congress even increased the number of full time auditors available for such work by 6 percent.

Audit hours, change for large corporations
between FY 2005 and FY 2009

2. While the time spent auditing large corporations dropped a third, time spent auditing small and midsized corporations increased. Hours went up 30 percent for small and 13 percent for midsized tax audits.

Changes in IRS revenue agent
hours between FY 2005 and FY 2009

3. Unsurprisingly, audits of smaller corporations reveal less unpaid revenue for the work. Misreported tax dollars among the giants came to $9,354 per auditor hour, eight times higher than uncovered for the small and mid-size firms.

Like so many other things, the trend might be reversed by the Obama administration. But time is running out. Tax day presents yet another chance for the Obama team to show which side it’s on. This isn’t even about closing loopholes, just enforcing existing law. What are they waiting for?

The Fed Under Fire

Isaiah J. Poole — Mon, 13 Jul 2009 11:24:26 -0400

The Federal Reserve is already one of the most powerful and secretive institutions in Washington, long considered beyond the reach of lawmakers. Yet some Washington leaders are looking to give the Fed even more power in the name of financial reform—even as the Fed is unable or unwilling to fully and publicly account for the trillions of dollars it has already distributed to the financial sector in the wake of the current financial crash.

A growing number of progressive and conservative lawmakers are pushing for a financial audit of the Federal Reserve. A bill that would authorize this first-ever audit is currently pending in the House. This American News Project documentary explains the reasons behind this bipartisan movement to hold the Fed accountable.

Some Choice Words for 'The Select Few'

Bill Moyers — Mon, 13 Jul 2009 11:11:05 -0400

with Michael Winship

If you want to know what really matters in Washington, don't go to Capitol Hill for one of those hearings, or pay attention to those staged White House "town meetings.” They’re just for show. What really happens – the serious business of Washington – happens in the shadows, out of sight, off the record. Only occasionally – and usually only because someone high up stumbles -- do we get a glimpse of just how pervasive the corruption has become.

Case in point: Katharine Weymouth, the publisher of The Washington Post – one of the most powerful people in D.C. – invited top officials from the White House, the Cabinet and Congress to her home for an intimate, off-the-record dinner to discuss health care reform with some of her reporters and editors covering the story.

But CEOs and lobbyists from the health care industry were invited, too, provided they forked over $25,000 a head – or up to a quarter of a million if they want to sponsor a whole series of these cozy get-togethers. And what is the inducement offered? Nothing less, the invitation read, than “an exclusive opportunity to participate in the health-care reform debate among the select few who will get it done.”

The invitation reminds the CEOs and lobbyists that they will be buying access to “those powerful few in business and policy making who are forwarding, legislating and reporting on the issues…

"Spirited? Yes. Confrontational? No." The invitation promises this private, intimate and off-the-record dinner is an extension “of The Washington Post brand of journalistic inquiry into the issues, a unique opportunity for stakeholders to hear and be heard.”

Let that sink in. In this case, the “stakeholders” in health care reform do not include the rabble – the folks across the country who actually need quality health care but can’t afford it. If any of them showed up at the kitchen door on the night of this little soiree, the bouncer would drop kick them beyond the Beltway.

No, before you can cross the threshold to reach “the select few who will actually get it done,” you must first cross the palm of some outstretched hand. The Washington Post dinner was canceled after a copy of the invite was leaked to the Web site Politico.com, by a health care lobbyist, of all people. The paper said it was a misunderstanding – the document was a draft that had been mailed out prematurely by its marketing department. There’s noblesse oblige for you – blame it on the hired help.

In any case, it was enough to give us a glimpse into how things really work in Washington – a clear insight into why there is such a great disconnect between democracy and government today, between Washington and the rest of the country.

According to one poll after another, a majority of Americans not only want a public option in health care, they also think that growing inequality is bad for the country, that corporations have too much power over policy, that money in politics is the root of all evil, that working families and poor communities need and deserve public support if the market system fails to generate shared prosperity.

But when the insiders in Washington have finished tearing worthy intentions apart and devouring flesh from bone, none of these reforms happen. “Oh,” they say, “it’s all about compromise. All in the nature of the give-and-take-negotiating of a representative democracy.”

That, people, is bull – the basic nutrient of Washington’s high and mighty.

It’s not about compromise. It’s not about what the public wants. It’s about money – the golden ticket to “the select few who actually get it done.”

When Congress passed the Helping Families Save Their Homes Act, "the select few” made sure it no longer contained the cramdown provision that would have allowed judges to readjust mortgages. The one provision that would have helped homeowners the most was removed in favor of an industry that pours hundreds of millions into political campaigns.

So, too, with a bill designed to protect us from terrorist attacks on chemical plants. With “the select few” dictating marching orders, hundreds of factories are being exempted from measures that would make them spend money to prevent the release of toxic clouds that could kill hundreds of thousands.

Everyone knows the credit ratings agencies were co-conspirators with Wall Street in the shameful wilding that brought on the financial meltdown. But when the Obama administration came up with new reforms to prevent another crisis, the credit ratings agencies were given a pass. They’d been excused by “the select few who actually get it done.”

And by the time an energy bill emerged from the House of Representatives the other day, “the select few who actually get it done” had given away billions of dollars worth of emission permits and offsets. As The New York Times reported, while the legislation worked its way to the House floor, “it grew fat with compromises, carve-outs, concessions and out-and-out gifts,” expanding from 648 pages to 1400 as it spread its largesse among big oil and gas, utility companies and agribusiness.

This week, the public interest groups Common Cause and the Center for Responsive Politics reported that, “According to lobby disclosure reports, 34 energy companies registered in the first quarter of 2009 to lobby Congress around the American Clean Energy and Security Act of 2009. This group of companies spent a total of $23.7 million – or $260,000 a day – lobbying members of Congress in January, February and March.

“Many of these same companies also made large contributions to the members of the Senate Environment and Public Works Committee, which has jurisdiction over the legislation and held a hearing this week on the proposed ‘cap and trade’ system energy companies are fighting. Data shows oil and gas companies, mining companies and electric utilities combined have given more than $2 million just to the 19 members of the Senate Environment and Public Works Committee since 2007, the start of the last full election cycle.”

It's happening to health care as well. Even the pro-business magazine The Economist says America has the worst system in the developed world, controlled by executives who are not held to account and investors whose primary goal is raising share price and increasing profit – while wasting $450 billion dollars in redundant administrative costs and leaving nearly 50 million uninsured.

Enter "the select few who actually get it done." Three out of four of the big health care firms lobbying on Capitol Hill have former members of Congress or government staff members on the payroll – more than 350 of them – and they’re all fighting hard to prevent a public plan, at a rate in excess of $1.4 million a day.

Health care policy has become insider heaven. Even Nancy-Ann DeParle, the White House health reform director, served on the boards of several major health care corporations.

President Obama has pushed hard for a public option but many fear he’s wavering, and just this week his chief of staff Rahm Emanuel – the insider del tutti insiders – indicated that a public plan just might be negotiable, ready for re-engineering, no doubt, by “the select few who actually get it done.”

That’s how it works. And it works that way because we let it. The game goes on and the insiders keep dealing themselves winning hands. Nothing will change – nothing – until the money lenders are tossed out of the temple, the ATMs are wrested from the marble halls, and we tear down the sign they’ve placed on government – the one that reads, “For Sale.”

Bill Moyers is managing editor and Michael Winship is senior writer of the weekly public affairs program Bill Moyers Journal, which airs Friday night on PBS. Check local airtimes or comment at The Moyers Blog at www.pbs.org/moyers .

2044 on FireDogLake

Eric Lotke — Wed, 01 Jul 2009 11:02:38 -0400

I’ve blogged about my novel, 2044, here and here. 2044 is a future tale that starts where George Orwell’s 1984 left off. The problem in 2044 isn’t Big Brother and the leviathan government. The problem is Big Brother, Inc., and the all-powerful marketplace.

This post broadens the horizons. FireDogLake will feature 2044 on its book salon on Sunday.

If you weren’t familiar already, FireDogLake’s book salon is a terrific forum where authors discuss their work. It’s an on-line conversation and a chance for direct Q&A on important subjects. This Sunday’s forum will put me in the company of James Galbraith (about the economy), Tom Ricks (about Iraq) and Eric Boehlert (about blogging on the bus), who have all been on Firedog’s book salon. Of course, I’ll be talking about 2044, my new novel where the government doesn’t take over. It gets taken over.

The salon takes place every Sunday evening.
I’ll be on this Sunday, July 6 from 5:00 to 7:00 p.m. EDT. Right after we celebrate our independence.

Please join us. And ask me a question. A hard one.
It’s not necessary but of course it’s more than okay if you buy a book.

PS: Chapter one is available on my web page.

2044: The Novel Comes True

Eric Lotke — Fri, 26 Jun 2009 16:17:01 -0400

Remember a while ago I wrote about my new novel, 2044? 2044 starts where George Orwell’s 1984 left off. The problem isn’t Big Brother and the leviathan government. The problem is Big Brother Inc., and the all-powerful marketplace.

The 2044 story is about water. Giant businesses control the water supply. An entrepreneur who figures out how to take salt out of seawater gets hammered.

Of course, I want you to read my novelized version of corporate domination. But reality is even scarier.

As Arianna Huffington puts it, the lobbyists are “on a roll.” What’s getting rolled? The change we need.

The first roll is over health care reform. The American people want health care reform, and more than three-quarters of them (76 percent) want a public plan option. But the insurance lobby doesn’t, and their lobbyists outnumber elected officials on Capitol Hill by more than three to one. The health care industry spent $267 million on lobbying and campaign contributions last year alone, and they aren't spending money for nothing.

But oil and gas companies are racing to catch up. They increased spending on lobbying faster than any other industry, according to the Associated Press with data from the Center on Responsive Politics. It’s better for the old fuel industries to keep us hooked on dirty and finite fossil fuels than to explore new sources. And they’re paying to advance their interests. The industry spent $44.5 million lobbying Congress and federal agencies in the first three months of this year, on pace to shatter last year's record, which itself was up 73 percent from the year before that.

And the bailout on Wall Street continues to consume billions, with virtually no accountability. We give the mega-banks money to make loans, and the banks use our money to buy other banks, reconstructing the house of cards that got us into this mess. The banks are "still the most powerful lobby on Capitol Hill," lamented Senator Dick Durbin (D-Ill.)." And they frankly own the place."

Goldman Sachs is set to make record bonus payouts this year. According to the London Guardian, “Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.”

Record bonus payouts! That’s the reward for (not quite) wrecking the global economy. Or in the words of the stranger watching TV in 2044, “They couldn’t say it if it wasn’t true.”

2044 is a warning. One of many. There’s a lot of work to do.

The Weekly Audit: Why Accountability Matters

Zach Carter — Tue, 26 May 2009 12:05:04 -0400

With workers all over the globe trudging through a catastrophic recession, it's almost a given that governments will be battling the economic slide for a long time. Part of the effort to rebuild must involve new rules and regulations, but meaningful systems for economic accountability will be just as essential. If we do not hold the reckless executives who caused this crisis accountable for their actions, we risk regressing into similar turmoil in the near future.

We all know that times are tough, and almost all of us agree on the cause: A massive Wall Street risk-binge combined with an almost total failure of regulatory oversight. It's surprising that few meaningful criminal charges have been filed amid what may very well be the worst financial crisis in history. Bernie Madoff will likely spend the rest of his life behind bars, but the subprime mortgage brokers who specialized in predatory loans–and the Wall Street banks that bought them–have yet to face consequences in court.

In The American Prospect, Tim Fernholz details the efforts of some state-level officials to investigate and punish white-collar crime at the nation's largest financial firms. Much of the problem, Fernholz explains, results from an insane legal landscape at the federal level. Active deregulation of the financial sector, which began in the 1980s, is shielding the irresponsible risk-taking that caused the current crisis from legal penalties.

Despite these obstacles, Massachusetts Attorney General Martha Coakley and other key officials are going after some of the worst offenders, and have successfully taken action against some of the predatory profiteers, including subprime mortgage lender Fremont Investment & Loan and Wall Street icon Goldman Sachs. Coakley secured an injunction against Fremont to prevent the company from foreclosing on its borrowers, and Goldman agreed to modify $50 million in predatory mortgages.

But while Coakley's investigations may bring some much-needed relief to troubled homeowners, they're only part of the solution. If executives that approved their companies' subprime policies go through this crisis unscathed, it will be difficult to deter similar behavior in the future.

Fremont had to be sold off last year at fire-sale prices to avoid bankruptcy, but Goldman has weathered the economic downturn better than many of its Wall Street brethren. Much of the company's resiliency, however, stems from its ability to secure billions upon billions of dollars of bailout financing from the U.S. government. Over at AlterNet, Jim Hightower blasts Goldman for its multiple avenues of taxpayer support and emphasizes that only the notorious Troubled Asset Relief Program (TARP) comes with any strings attached whatsoever. While Congress attached some very modest restrictions on executive compensation to the TARP bailout, the FDIC and the Federal Reserve have provided big banks with trillions in loans and guarantees completely free of restrictions on how these perks are deployed.

Goldman received $10 billion under TARP, which the company hopes to repay soon to shrug off those CEO pay limits. When the government bailed out AIG, $12 billion of the funds were directed Goldman's way. But perhaps the greatest and lowest-profile outrage comes in the form of the FDIC's Temporary Liquidity Guarantee Program. Hightower notes that the FDIC has guaranteed $28 billion of Goldman's recently issued corporate debt without imposing any restrictions on the Wall Street giant. In short, if Goldman were to default, the government would pay off its investors. This taxpayer guarantee has allowed Goldman and many of its banking peers to secure capital at exceptionally low rates, helping the firms survive during a time when any financing is hard to come by.

Even if Goldman is able to repay its TARP money, the company remains thoroughly dependent on taxpayer assistance. Once the TARP funds are paid off, Goldman will be free to pay its executives whatever it wants—even when that salary is subsidized by American tax dollars. That's a pretty perverse definition of accountability.

Of course, botched bailouts are not unique to the financial sector. As John Nichols explains in The Nation, the terms of automaker Chrysler's bankruptcy proceeding include plans to close down manufacturing plants across the Midwest, a strategy that undermines the entire economic justification for bailout: Sparing investors pain in order to save jobs.

"Tens of billions of taxpayer dollars are being poured into Chrysler and General Motors, ostensibly to 'save' the U.S. auto industry," Nichols writes. "Yet, the companies have acknowledged that they plan to use the money to shutter factories, lay-off tens of thousands of factory workers and dramatically downsize dealership networks–at the cost of as many as 100,000 additional jobs."

Still worse, it appears that both Chrysler executives and officials from the Obama administration mislead Congress on the implications of the bankruptcy. Nichols cites a letter from Rep. Dennis Kucinich, D-Ohio, in which the lawmaker says Congress was told there would be no permanent job losses a result of the Chrysler bankruptcy filing. The very next day, plant closings were announced in Michigan, Missouri, Wisconsin, and Ohio.

Even the economic stimulus package rewarded companies with a history of recklessness. In a piece for Salon, ProPublica journalists Michael Grabell and David Epstein reveal how contractors that have paid substantial fines for violating environmental regulations, federal safety rules and laws against racism have been able to score new business with the federal government. The worst offender? A contractor known as CACI International, which has been awarded three contracts worth $1.5 million under the stimulus package, despite ties to abuses at Abu Ghraib prison in Iraq.

CACI helped hire interrogators at Abu Ghraib, but an Army investigation found that the contractor ended up employing people with "little or no interrogator experience." Abuses committed by CACI employees included dragging a handcuffed prisoner on the ground, placing a prisoner in an "unauthorized stress position," dressing a prisoner in women's underwear and lying to investigators about using dogs in interrogations, according to Grabell and Epstein.

If the government relies on criminals to build the recovery, the public is not going to get the results it needs. But the recovery is only part of the solution to the current economic crisis. If we fail to prosecute executives whose active scheming and criminal negligence brought down the global economy, we are inviting more of the same behavior in the future.

Zach Carter writes The Weekly Audit for The Media Consortium.

Wall Street Probe Needs Your Vigilance

Isaiah J. Poole — Fri, 22 May 2009 10:19:26 -0400

President Obama's signing of a financial fraud crackdown bill this week has been largely overshadowed by the erroneous and irresponsible rantings of Vice President Dick Cheney and his right-wing fear-monger allies, and that's unfortunate for two important reasons.

One, it's a significant victory progressives should celebrate. In addition to giving the federal government new tools to detect and punish the kind of law-breaking and deception that is at the root of the economic crisis, it creates a "Financial Crisis Inquiry Commission" charged with examining "the causes, domestic and global, of the current financial and economic crisis in the United States."

This commission is charged with playing the same role that the Senate commission led by Ferdinand Pecora in the 1930s did in exposing the wrongdoing and ethical breaches that precipitated the Great Depression. The 10 members of the commission will be chosen by the Senate and House leadership. It has a broad mandate to probe the operations of financial markets, regulatory agencies, compensation structures, tax policies—in short, all of the major factors that drove the actions that led to the economic crisis. It will have the power to subpoena witnesses (with the caveat that either the Democratic chairman and the Republican co-chairman agree or that a bipartisan majority of the commission agrees) and is charged with reporting wrongdoing that it uncovers to either the Justice Department or the appropriate state's attorney general.

President Obama, in signing the bill, noted that the commission was important "so that we make sure a crisis like this never happens again."

The other reason that this story should have gotten more attention is the signing statement that Obama attached to the bill. That statement says, in part:

Section 5(d) of the Act requires every department, agency, bureau, board, commission, office, independent establishment, or instrumentality of the United States to furnish to the Financial Crisis Inquiry Commission, a legislative entity, any information related to any Commission inquiry. As my Administration communicated to the Congress during the legislative process, the executive branch will construe this subsection of the bill not to abrogate any constitutional privilege.

This could be nothing more than the White House rattling sabers, but given the Bush administration's record of using signing statements as bald-faced defiance of congressional intent, it behooves the movement to be on high alert. This is a potentially troubling signal that the administration reserves the right to obstruct the commission if it probes too deeply into the now-opaque decisions made by, for example, the Treasury Department in disbursing bailout money through the Troubled Asset Relief Program.

That is why the next critical decision that we will have to relentlessly push is the appointment of a tough-minded commission leader. That will be the job of Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi, who was an active proponent of the Pecora Commission idea. Elizabeth Warren, the expertly probing chairman of the special congressional committee overseeing the Troubled Asset Relief Program, has exhibited the kind of leadership that this job needs.

What's also clear is that we will have to watch the watchdog. The administration could hamstring this commission with constitutional privilege claims, and Republican appointees could cripple the commission to score political points and protect its Wall Street bankrollers. Finally, a media preoccupied with what it perceives to be sexier issues and weakened in its capacity to do its own investigative journalism could allow the commission's work to fall into obscurity, thus robbing it of its power to drive fundamental reforms. We will have to be ready to push the commission to confront the tough questions; to call out the obstructionists, regardless of who they are; and to amplify the commission's findings as we forge new and better rules for our economy.

Ken Lewis Ouster: The Start of Something Big

Mike Elk — Thu, 30 Apr 2009 11:25:07 -0400

Wednesday marked the beginning of what could be a stockholders revolution as Bank of America CEO Kenneth D. Lewis was ousted as chairman of the board.

A coalition of unions, community groups, pension funds, and angry stockholders forced Lewis to step down over his acquisition of Merrill Lynch at $15 billion loss and decision to give out $3.6 billion in bonuses to Merrill Lynch's executives. His loss of the chairmanship is most likely a precursor to him being forced to leave as CEO as it was for Wachovia's Kennedy Thompson and Washington Mutual's Kerry Killinger.

A coalition called Take Back the Economy, composed of organized labor, religious groups, community organizations and Moveon.org, had been calling for Lewis' ouster for several months. Brave New Films produced a video narrated by former Labor secretary Robert Reich outlining the corruption occurring at Bank of America . Through a grassroots and netroots-driven campaign, over 100 events were held across the nation against Bank of America and more than 90,000 taxpayer proxy cards were collected calling for Lewis's ouster for his corruption and greed.

In addition to the ouster, these groups demanded that two new board seats be created for an independent taxpayer director and a front-line employee. They demanded that all bonuses for executives be eliminated until taxpayers are paid back money the bank received under the Troubled Asset Relief Program. They also demanded that stronger whistleblower protections for any workers who reports abusive lending or banking practices are put in place. Finally, they called for Bank of America to provide health-care to all of its 247,000 workers, which it currently does not.

Meanwhile, The Finger Brothers, owners of 1.1 million shares of Bank of America from the sale of their family-controlled bank, Charter BancShares, to Bank of America), spent over $100,000 of their own money running television ads against Lewis. At the same time, worker-controlled pension funds like the CalPERS (the California pension plan whose efforts to sucessfully bring down corrupt NYSE Chairman DIck Grasso I wrote about last month here) and other state workers' pension funds came out publicly that they were going to vote against Lewis. All the heat from activists, angry investors, and state pension funds lead proxy advisory firms like RiskMetrics and Glass Lewis, which advise the portfolio managers of large institutional investors such as churches and nonprofits, to advocate that their clients cast their votes against Lewis.

As a result of the organized campaign from activists, pension funds, and angry stockholders, Lewis was ousted as chairman by a narrow 50.34 percent to 49.66 percent margin.

The message to the CEOs was clear: Watch out! Either CEOs will be more responsive to the demands for reform from small stockholders and activists or they will risk sharing the same fate as Ken Lewis. With over $6 trillion of workers' money in retirement plans, pension funds, profit-sharing, and stock plans, worker-controlled pension funds and their allies have a lot of weight in making these CEOs more accountable.

Could we be onto the start of something big, perhaps a stockholder revolution? I certainly hope so. My message to all the people upset over their losing their retirement funds is, "Don't mourn, organize."

Senate Backs Financial Crisis Investigative Panel

Isaiah J. Poole — Thu, 23 Apr 2009 13:45:01 -0400

Momentum toward a Pecora Commission-style inquest into the roots of the financial crisis got a boost from the Senate on Wednesday when it approved an amendment to a financial fraud bill that would authorize a select investigative committee.

If the bill passes with the amendment, which was approved by voice vote Wednesday night, the panel would "examine all causes, domestic and global, of the current financial and economic crisis in the United States."

The amendment has some key elements of what we have been calling for. The committee would be comprised of 10 people chosen by both parties in the House and Senate, and would explicitly have the power to subpoena witnesses and collect sworn testimony. The committee would have a year to submit its first report to the Senate, and would have two years to submit a final report.

Sen. Kent Conrad,D. N.D., cosponsored the amendment with Sen. Johnny Isakson, R-Ga. The bill that the amendment was attached to, The Fraud Enforcement and Recovery Act, is being debated on the Senate floor today and could be voted on later today.

In the meantime, House Speaker Nancy Pelosi promised that she would flesh out her own call for a Pecora Commission by the end of this week. If it is at least as tough as the Senate bill, we will have an important foundation for driving the accountability and reform that we need.

This post has been corrected. Several details in the original version related to the creation of a Senate select committee on the financial crisis, which was also added by amendment, not to the independent commission.