Game On: The First Presidential Debate

[Bond]

This will be exciting.

[Professor S]

I'm more interested in the analysis of the debate and the highlights. I think most people here have already committed to their candidate. Like South Park says, undecided voters are the biggest idiots in the world.

[GameMaster]

It would've been more exciting if McCain had stuck to his guns in regards to not attending the debate. I, for one, wanted to see Obama take part in a one-man debate.

Me = more excited for the VP debate.

Is there room in this thread to dicuss the harsh beating Palin took from the lovely Katie Couric?

[Professor S]

It would've been more exciting if McCain had stuck to his guns in regards to not attending the debate. I, for one, wanted to see Obama take part in a one-man debate.

Me = more excited for the VP debate.

Is there room in this thread to dicuss the harsh beating Palin took from the lovely Katie Couric?

No, but if you'd like to revive the Palin thread, that would be ok.

[thatmariolover]

But McCain already won!

http://voices.washingtonpost.com/thefix/2008/09/mccain_wins_debate.html

[TheGame]

It would've been more exciting if McCain had stuck to his guns in regards to not attending the debate. I, for one, wanted to see Obama take part in a one-man debate.

Me = more excited for the VP debate.

Is there room in this thread to dicuss the harsh beating Palin took from the lovely Katie Couric?

Rhetorically, I can't see Mccain or Palin winning any debates. I think that interview was funny, but just a tad unfair in a sense. The media knows they got a dunce, so they ask questions that they know she can't answer and most politians won't be able to answer clearly. Lol

The debate tonight will be interesting though. Which station will it be on? And at what time?

[GameMaster]

The debate tonight will be interesting though. Which station will it be on? And at what time?

FOX, NBC, CBS, ABC, KQED, and CNN.

And I'm sure more.

6:00 if you still live in Davis.

[Bond]

http://d.yimg.com/us.yimg.com/p/nm/20080927/2008_09_26t120837_450x371_us_usa_politics.jpg?x=400&y=329&q=85&sig=skc5514m9q3ZnBdvHIPwoQ-- vs. http://d.yimg.com/us.yimg.com/p/afp/20080925/capt.cps.nru82.250908112151.photo03.photo.default-512x389.jpg?x=400&y=304&q=85&sig=CH92vehvDmEx09qAozmPSA--

Is it East vs. West? Or man against man?

[GameMaster]

http://img.photobucket.com/albums/v449/synthoid/Picture1-1-1.jpg

[Vampyr]

I like the blatant lies that Jon McCain is saying about Obama, and when Obama says "That's not true," he laughs at him.

[Bond]

This is such an awkward debate.

[BlueFire]

9:28 PM..

this is an uncomfortable situation

[Bond]

Did Obama just call John "Tom?"

[Vampyr]

I really wish McCain would stop snickering and laughing.

If I knew nothing about either of these candidates before this started, I would think nothing of him except that he is a condescending...bad word.

[Vampyr]

How in the world are we winning in the middle east?

We aren't, we never have, and we never will.

I've said it once and I'll say it again, the Middle East will never be fixed. Why? We are imposing a western culture onto a non western people. Western countries went into the Middle East and divided it up into little countries that do not actually exist. Country lines were not drawn where tribal lines already existed. We were just like "Hrrm, the forest ends here, this is a good place to end this country and start the next one." or "Hey, there's a mountain there, and a river there, lets divide it here."

[GameMaster]

This is more uncomfortable than that Mary Tyler Moore reunion on Oprah!

[Bond]

Actually, Great Britain and France drew most of those "imaginary lines," not America. The issues in the Middle East are much more complex than simply the border forming post-World War I.

This is still an extremely awkward debate.

I honestly want to close my eyes.

[Vampyr]

Actually, Great Britain and France drew most of those "imaginary lines," not America. The issues in the Middle East are much more complex than simply the border forming post-World War I.

This is still an extremely awkward debate.

I honestly want to close my eyes.


...I never said America. I said the West.

Yes, it is, but it's naive and stupid to say that isn't an issue. It is a fundamental flaw, and one of the roots of the problem.

[Vampyr]

And where the <censor> is McCain's lapel pin?

[Bond]

http://www.norcalblogs.com/watts/images/polarization.gif

[BlueFire]

Maybe it's just me, but..

addressing the Iran question with a reference to the Holocaust. That was just classy.

[Vampyr]

Maybe it's just me, but..

addressing the Iran question with a reference to the Holocaust. That was just classy.

Ahhh, we paused my TV for about 5 minutes a while back.

I was like, "WTH is BF talking about?"

http://en.wikipedia.org/wiki/Godwin%27s_law

it's not just for the internets anymore!

[Fyacin]

I thought Mcain did a good job.

[Vampyr]

I thought Mcain did a good job.

:rofl:

[BlueFire]

I'm not really sure what I think of the debate.. I have to post about it later when I think about it more

[GameMaster]

I thought Mcain did a good job.

I couldn't agree more.

He really pounded Obama for his lack of experience.

Plus, McCain already knows our world's leaders both near and far.

[Bond]

This was a very poor debate. McCain's and Obama's personalities simply do not mesh into a smooth discussion. It's rigid, awkward, and odd.

[Professor S]

I agree with Bond and most of the comments about how uncomfortable the debate was. I didn;t see the whole thing, but from what I saw I'm willing to call it a draw. Obama pushed McCain on the run-up to the war, and McCain pushed Obama on the surge and experience.

Overall , it just felt like a series on in-person attack ads.

BTW, I am loving the way CNN has reinvented itself. Its probably the only place where you can really find even handed reporting and analysis, since Fox leans hard conservative but has left-wing voices to provide some balance, and MSNBC has gone off the deep-end.

[Fyacin]

:rofl:

That was constructive.

[Vampyr]

I agree with Bond and most of the comments about how uncomfortable the debate was. I didn;t see the whole thing, but from what I saw I'm willing to call it a draw. Obama pushed McCain on the run-up to the war, and McCain pushed Obama on the surge and experience.

Overall , it just felt like a series on in-person attack ads.

BTW, I am loving the way CNN has reinvented itself. Its probably the only place where you can really find even handed reporting and analysis, since Fox leans hard conservative but has left-wing voices to provide some balance, and MSNBC has gone off the deep-end.

The experience argument is a dead horse, especially now that he picked Sarah Palin to possibly lead our country. And experience alone doesn't mean anything.

And you really thought it was a series of personal attacks? The mot offensive thing Obama said during the entire debate was, "It doesn't mean we invite them over for tea." And that wasn't even directed at McCain, it was directed at the picture McCain was trying to paint of Obama.

McCain, on the other hand, spent the entire debate snickering and giggling like a little school girl, and at points telling blatant lies about Obama, and repeating the phrase "Obama doesn't understand." Obama, when retaliating to these lies, would simply say "That isn't true." And explain why. He never got defensive. When McCain said something true, he would say, "John is right."

Obama defended his beliefs and explained his opinions, while McCain attacked Obama's and rarely defended his own.

I'm not sure about you, but I know which kind of politics I prefer.

@Fyacin: So was your comment.

[Fyacin]

The experience argument is a dead horse, especially now that he picked Sarah Palin to possibly lead our country. And experience alone doesn't mean anything.

And you really thought it was a series of personal attacks? The mot offensive thing Obama said during the entire debate was, "It doesn't mean we invite them over for tea." And that wasn't even directed at McCain, it was directed at the picture McCain was trying to paint of Obama.

McCain, on the other hand, spent the entire debate snickering and giggling like a little school girl, and at points telling blatant lies about Obama, and repeating the phrase "Obama doesn't understand." Obama, when retaliating to these lies, would simply say "That isn't true." And explain why. He never got defensive. When McCain said something true, he would say, "John is right."

Obama defended his beliefs and explained his opinions, while McCain attacked Obama's and rarely defended his own.

I'm not sure about you, but I know which kind of politics I prefer.

@Fyacin: So was your comment.

:rofl:

Oh wait....

Bias sees what Bias wants. I'm not saying I'm not biased of course, just that arguing won't contribute anything.


I did find it funny when Mcain stumbled over "imanutjob's" name.

[Vampyr]

If I'm only seeing things through biased eyes, then, please, humor me and post what personal attacks Obama made.

[Professor S]

If I'm only seeing things through biased eyes, then, please, humor me and post what personal attacks Obama made.

I'm not sure where you got your "personal attacks" idea from, but I said in-person attack ads. I call any accusation at the other, rather than an expolanation of personal beliefs, attacks. Both candidates took part in that.

And for the record, I found the most disrespectful thing done the entire night was when Obama constantly referred to McCian as "John" and not by his title, which is the custom. The man's been a Senator for 30 years, he deserves the respect.

Overall, I hated Lehrer's idea of having the candidates speak to one another. This is a debate, not a conversation. There is a structure that has been proven in time and use. In Congress, there is a reason why all discussion is directed at the SPEAKER and not one another: It creates awkward moments and unconstructive discourse. And thats what we saw.

[Jason1]

When Barack sends me emails he signs them Barack, not Mr. Obama or Barack Obama. The whole "calling someone by their title is the respectful thing to do" is pretty much gone now. Its not like hes showing disrespect calling him John.

Obama listened to Mcains arguements, recognized them, and stated how he disagrees. Mcain snickerd a lot and looked stupid. But whatever he is the Maverick so all is forgiven!

[Vampyr]

I'm not sure where you got your "personal attacks" idea from, but I said in-person attack ads. I call any accusation at the other, rather than an expolanation of personal beliefs, attacks. Both candidates took part in that.

And for the record, I found the most disrespectful thing done the entire night was when Obama constantly referred to McCian as "John" and not by his title, which is the custom. The man's been a Senator for 30 years, he deserves the respect.

Overall, I hated Lehrer's idea of having the candidates speak to one another. This is a debate, not a conversation. There is a structure that has been proven in time and use. In Congress, there is a reason why all discussion is directed at the SPEAKER and not one another: It creates awkward moments and unconstructive discourse. And thats what we saw.

Talk about seeing things through a biased.

[Professor S]

Talk about seeing things through a biased.

Please explain. Blanket statements like this enlighten no one, including myself... And for the record, I've never claimed to NOT be biased. I'm obviously a fan of McCain and I dislike Obama greatly. I;ve been clear on this I think. Your analysis is biased as well, obviously, but I at least expect discourse and not empty blanket statements.

As for considering the debate a tie, I don't think thats good for McCain. This was McCain's issue, and he should have been more impressive and won decidedly if he wants to win he election. He didn't, and that will not sit well with undecided voters.

As for referring to one another by their title, its not something of the past... its currently done every day in Congress. Do yourself a favor and turn on CSPAN sometime. The tactic of calling McCain "John" was calculated and purposeful, because Obama needed to show himself as a colleague, and not a junior senator. In that respect, I think he was affective. Disrespectful, especially when McCain referred to Obama properly? Very.

[Vampyr]

Just the fact that you thought -that- was the most disrespectful thing, rather than the other things I've already said.

Also:

A new USA TODAY/Gallup Poll shows 46% of people who watched Friday night's presidential debate say Democrat Barack Obama did a better job than Republican John McCain; 34% said McCain did better.

Obama scored even better -- 52%-35% -- when debate-watchers were asked which candidate offered the best proposals for change to solve the country’s problems.

[Professor S]

I figured the polls would show well for Obama, and that reflects that independents would have expected McCain to do much better than he did on the foreign policy issue.

[The Germanator]

I figured the polls would show well for Obama, and that reflects that independents would have expected McCain to do much better than he did on the foreign policy issue.

Yet you still contend that McCain is better for the job? If McCain isn't even good at what he is supposed to be good at according to the independents, then...what is he good at? Seriously..It's over. 50% to 42% according to Gallup at this point.

This too, by the way...http://www.sciam.com/article.cfm?id=media-bias-presidential-election

I am writing drunk from the UK, so if this isn't a great post, I understand, it's more of a a partisan gloat..

[Professor S]

Yet you still contend that McCain is better for the job? If McCain isn't even good at what he is supposed to be good at according to the independents, then...what is he good at? Seriously..It's over. 50% to 42% according to Gallup at this point.

You confuse performance during a debate for performance as president. I can say McCain did not perform that well during the debate, but still is by far the more qualified and superior candidare on almost every level. McCain came off a little bitter, and did not challenge Obama on some glaring misstatements, such as when Obama claimed McCain's accusation that Obama voted for a tax increase for Americans making $45k year. Obama vehemently accused McCain of lying about it, but in fact Obama DID vote for that tax increase according to FactCheck.

MCCain also spent too much time talking about spending when he should have stayed on the bailout topic when they talked economics. That was the hot button issue, and McCain looked like he was deflecting, when actually I think he was addressing a core issue. It came off bad.

A tie in a foreign policy debate is a win for Obama because of expectations. Obama is still the favorite, and now I think much more likely to win. It also doesn't take away from the fact he is one of the worst candidates ever to run for President.


This too, by the way...http://www.sciam.com/article.cfm?id=media-bias-presidential-election

I wonder what those numbers of Lichter's would be like post-Palin nomination? Also, being the Spring and early summer when Lichter did the study on Obama/McCain, was Obama still heads-up with CLINTON at the time? There are a lot of variables we don't know, and none of his points address any of the points I have made about media bias.

[Jason1]

This election wont even be close. It will be an Obama landslide. Ive been saying it from the begining. Its going to be an Obamafied country in 09. Spread the love, give peace a chance! Obama is bringing back the middle class. Take from the rich, give to the poor thats my philosophy and Obama's as well. All who dont like it can go take their guns to their Nascar races and shoot stuff. Mcain can drive one of his 13 cars to whichever of his 7 houses he chooses, and go back to his millionaire wife. I feel so sorry for him.

[KillerGremlin]

You know what polls matter the most? The polls on election day. I know Obama commands a lead in the polls, but he needs his voters to go out and vote.

In regard to the debate...considering how poor of a public speaker McCain is (imo) I thought he did pretty good. Obama was dead on with his opinions of the Iraq War and Afghanistan and catching Bin Laden and spending American resources on foreign affairs. McCain made some good points about the economy...but step 1 to fixing the economy is getting out of Iraq.

ps, the VP pick doesn't matter that much

If you want to argue that Palin somehow demeans the Republican Party that McCain is running for then you have been lost in the media shitstorm (or borestorm imo) regarding the VPs.

[Vampyr]

Could someone clarify something for me? Why does McCain keep saying that Obama's tax plan will increase taxes on people making less than like, 42k a year? He said it during the debate, and it's on one of his commercials, too.

I think he's lying, but this isn't an attack at McCain, I'm genuinely interested to know if this is actually true, and how so.

Here's a chart from the Washington Post:
http://www.washingtonpost.com/wp-dyn/content/story/2008/06/09/ST2008060900950.html

http://media3.washingtonpost.com/wp-dyn/content/graphic/2008/06/12/GR2008061200193.gif


Obligatory Support Obama Hyperbole:
http://cdn-www.cracked.com/articleimages/dan/9-25-08/McBeefy.jpg

[Professor S]

Could someone clarify something for me? Why does McCain keep saying that Obama's tax plan will increase taxes on people making less than like, 42k a year? He said it during the debate, and it's on one of his commercials, too.

Because he voted for those taxes. See my above post and check out FactCheck.org. And the number is $45k, I believe.

Here's a chart from the Washington Post:
http://www.washingtonpost.com/wp-dyn/content/story/2008/06/09/ST2008060900950.html

I often question numbers when taxes are involved with Obama, because he hides massive increases in taxatiuon through semantics, by renaming the taxes. I've already talked about this in others posts. 10th reply down:

http://www.gametavern.net/forums/showthread.php?t=18993

Obama would raise capital gains by as much as 2/3's and I doubt those numbers show up on this chart, as they are not considered INCOME when all is said and done. Capital gains taxes affect anyone who owns a home and anyone who owns stock (over 60% of Americans). It also kills investment in American business, and conversely encourages investment overseas.

He would also greatly increase the burden of social security on small businesses, whose tax models change delending on whether or not they're incorporated, LLC's, or sole proprietorships, and I doubt those numbers show up on this chart.

EDIT: Yep, those numbers are from thre Tax Policy Center, and I KNOW those numbers don't reflect any variables I described above.

Basically, Barack Obama's economic plan is the exact opposite of any economic plan that has ever worked in the history of economics. Policies like his failed during the Great Depression, they failed during Johnson's Great Society and they crashed and burned during Carter's malaise days where the top tax rate was close to 70% when everything was said and done (Obama's top burden would hover around 55-60%, I believe).

Europe has even begun to abandon their socialist tendencies and are adopting more business friendly tax models, and its only imporving their economy. Ireland, after years of economic pain and poverty, virtually annihilated taxes on business and in less than ten years they went from sustained brutal poverty to a thriving economy, one of the most prolific in all of Europe.

I know no one wants to admit that "trickle down" or supply side economics works, but ask yourself this" If everyone can agree to the obvious fact that failures in big business trickle down economic pain and hysteria to everyone in the country, how can we deny that their success trickles down as well?" The trick is to keep the big dogs healthy, so the little dogs are healthy too.

Also, his "tax cuts" for the poor and really welfare checks he he is distributing money to people who didn't pay much in taxes to begin with. For a thematic example (numbers are not exact, but show the theory): If you pay no taxes, you would get $1,000 check from the government. If you paid $200, you would get a $800 check from the government, etc...

"Hey poor people, no need to try and get out of poverty anymore! The government subsidizes your misery and makes you more comfortable in your trailer while emasculating you at the same time! Need health-care? we'll provide the worst that everyone else's money can buy, and with no accountability because its ensconced in a massive, impenetrable bureaucracy!! Still need a job? Make $30K a year under Obama as a paid "volunteer"! There are tens of thousands of us with no way to pay for our "volunteer" salaries because they really aren't a part of my budget because you're "volunteers"! Makes sense, right? Don't worry about getting that GED or invenstigating college grants for further education, we've got you covered, because the government does all the thinking for you!. ARE WE NOT KIND!?!?!"


And Jason, keep `em coming,! I find it entertaining, especially the Robin Hood line. I suppose if all you're going to do is repeat othere people's opinions, they should at least be taken from a classic work of fiction. You should have your own line of Hallmark "Marxist" greeting cards.

[Professor S]

Hmmm, I see Xantar is bopping around the forums. I must prepare for his salvo... :D

[Xantar]

Sorry Strangler, I'll have to disappoint you. My feeling on the debate is more or less the same as yours: most of us here have already made up our minds and it's just a question of who appeals most to "undecided" voters with this debate.

According to the polls, most of the "undecided" voters thought Obama won the debate and they ended up liking him more than McCain. I honestly don't understand why because I think if this had been judged point by point like in a college debate club, it would have been basically even (I agree with Obama's positions, but that doesn't mean I think he argued for them more effectively than McCain).

From all the various polls I've seen, it appears that undecided voters basically made their decision at an emotional level. In other words, Obama won because he smiled more while McCain refused to even look at him. It's an utterly stupid way to evaluate a political candidate, but that's the American electorate for you.

It's also worth noting that the CNN audience reaction gauge dipped for whichever candidate went on the attack at that particular moment regardless of which one it was. When McCain went on the attack, viewers thought less favorably of him while still maintaining a favorable view of Obama. When Obama went on the attack, he experienced a similar dip in favorability. So maybe they think Obama won just because he attacked less.

Not that any of it matters. Historically, debates have done nothing to affect presidential races except solidify support. They do nothing to sway swing voters more than one or two percent in either direction.

[Professor S]

Xantar, while we have you: What are your thoughts on the "bailout" plan. Myself, I'm torn about it, and the more a look into it, the more torn I become.

To keep it from happening again, my thoughts were to go back to separating the Mortgage industry from Investment/Securities and installing a government committee to oversee the Federal Reserve, and not a single Fed czar, so that we can better manage the cost of money and not have runs on bad debt.

Am I completely nuts on that? Thoughts?

[Xantar]

I haven't looked into the bailout plan. I understand it only just now got worked out, and I haven't had time to read up about it. The idea that some companies are "too big to fail" is an old classic from economics, and nobody has yet worked out a way to deal with the problem.

As a general idea, I hate the bailout. I understand it's sort of necessary, but it still stinks (it's kind of extraordinary that both liberals and conservatives hate it). My understanding is that the current deal will give $700 billion to Secretary Paulson in installments and it will require that we (i.e. the taxpayers) recoup as much of that investment back as possible. That's probably about the best we can hope for, and I've heard that when we nationalized a whole bunch of companies back in the Great Depression, we actually ended up with a net profit.

The problem: it took about a decade for the profit to show.

As to your idea about the Federal Reserve: I wouldn't mind having several Fed Chairmen instead of just one. However, I don't necessarily support making it into a government oversight committee. The Fed has some problems, but one of the good things about it is that it is that the Fed chairman is largely shielded from political whims. Putting a committee to oversee the Fed would destroy that independence, and neither you nor I want economic policies to be decided by people with a political agenda.

Besides, I don't think it was the Fed's fault. The problem is the Investment/Securities market came up with all these new financial products which people didn't fully understand. The Fed has no role in regulating that -- that's the SEC's job, and for whatever reason, they fell behind.

If I understand you correctly, you're proposing to separate mortgages from other investments and securities. That seems like a good idea to me, and I don't think you're crazy for believing that. I'm not sure if it's possible to really do that, though. All the same, it does seem like a good idea to make Freddie and Fannie either fully private or fully public companies. The fact that people could buy stock in them was just not good.

I think that at a fundamental level, we need to re-examine the issue of executive compensation in the financial system.

Hold on a second! Hear me out. I'm not saying we need to stop paying executives so much. I know some Goldman Sachs employees. They work very hard, and they deserve their high salaries. The problem as I see it is that a lot of them are rewarded for taking risks but they are not punished when those risks. Most of these investment bankers are paid with stock options which means the more they can increase the price of their stock, the more money they personally receive. There's nothing wrong with that except if they screw up, that just means they don't get as much extra bonus money. I think if someone in the financial industry screws up, they should lose money in proportion to the amount that they've cost their company. I don't know exactly how this would be done, but I think it would have prevented a lot of the problems we have now.

[Professor S]

I agree with pretty much everything you wrote. Onlya few corrections/ disagreements

As to your idea about the Federal Reserve: I wouldn't mind having several Fed Chairmen instead of just one. However, I don't necessarily support making it into a government oversight committee.

Neither do I. I meant that the government should appoint the committee of chairmen, like you said, and not a Fed "King on High". I certainly don't believe that politicians should be in control of the Fed. We'd all be broke.

Besides, I don't think it was the Fed's fault. The problem is the Investment/Securities market came up with all these new financial products which people didn't fully understand. The Fed has no role in regulating that -- that's the SEC's job, and for whatever reason, they fell behind.

I agree and disagree. The SEC should have regulted the products better, but I also feel that the Fed should have raised interest rates to stem the flow of loans based on the availability of cheap money. Money was cheap, mortgages were plentiful, and there was a run on those securities and everyone was too busy gobbling them up to check whether or not those mortgages were solid. A higher interest rate would have raised the risk of borrowing to buy.

If I understand you correctly, you're proposing to separate mortgages from other investments and securities. That seems like a good idea to me, and I don't think you're crazy for believing that. I'm not sure if it's possible to really do that, though. All the same, it does seem like a good idea to make Freddie and Fannie either fully private or fully public companies. The fact that people could buy stock in them was just not good.

They were separate for a long time. I believe the deregulation of the two happened in the 70's after the regulation was put in place after the Great Depression. In my opinion, those that originate the mortages should eb made to hold those mortgages. That way they will be MUCH more careful in who gets one. Also, I am not a fan of the CRA (Community Reinvestment Act) and I believe that had a hand in originating some bad mortgages.

http://media.townhall.com/Townhall/Car/b/aria080930.jpg

I think that at a fundamental level, we need to re-examine the issue of executive compensation in the financial system.

Hold on a second! Hear me out. I'm not saying we need to stop paying executives so much. I know some Goldman Sachs employees. They work very hard, and they deserve their high salaries. The problem as I see it is that a lot of them are rewarded for taking risks but they are not punished when those risks. Most of these investment bankers are paid with stock options which means the more they can increase the price of their stock, the more money they personally receive. There's nothing wrong with that except if they screw up, that just means they don't get as much extra bonus money. I think if someone in the financial industry screws up, they should lose money in proportion to the amount that they've cost their company. I don't know exactly how this would be done, but I think it would have prevented a lot of the problems we have now.

The problem is that most of these CEO's compensations are derived exactly as you said: They come from the bottom-line, and thats how the books get cooked so that they can get their bonuses while the company slowly slides into bankruptcy so the CEO can keep their job and walk away with a ton of cash.

I have the solution, and I'd LOVE to get your feedback on it:

Force the financial industry, specifically securities, credit and banking, to form a national self-regulating association with ethics standards, like in Real Estate, Medical and Law. Right now financial ethics are determined by the institution and there is no reprocussion for their violation.

Hear me out, because the key to this is the transfer of legal action from governmental law, to civil law. The burden of proof when deciding whether or not someone broke the law is all or nothing, and exceedingly difficult when you are dealing with very intelligent businessmen with the means to get the best legal council available. By installing the code of ethics and a self-regulatory association, you open these men up to more civil actions with a burden of proof that goes beyond "a shadow of a doubt" and has degrees of guilt determined by a jury of your peers.

The determination of an ethics board as to the nature of the offense could then be used as evidence in a civil, or even state and federal, trial and would greatly increase the chances of a conviction or settlement. Over time, this would help to stem the tide of white collar shenanigans, because the plaintiffs would be represented top-notch private lawyers who want a piece of the pie and convictions/massive settlements would increase greatly.

[Xantar]

The problem is that most of these CEO's compensations are derived exactly as you said: They come from the bottom-line, and thats how the books get cooked so that they can get their bonuses while the company slowly slides into bankruptcy so the CEO can keep their job and walk away with a ton of cash.

Right, but the thing about financial malfeasance is it's always discovered, and investigators are pretty good about figuring out who's at fault in the end. My proposal (which does not necessarily conflict with yours, but we'll get to that) is that stock options issued to company employees should be able to have negative value. We'd also probably have to mandate that people hold their stock for a year after leaving the company. Anyway, I'm just throwing it out as an idea.

Force the financial industry, specifically securities, credit and banking, to form a national self-regulating association with ethics standards, like in Real Estate, Medical and Law. Right now financial ethics are determined by the institution and there is no reprocussion for their violation.

I think it's important to think through all the implications of what you're saying here, so I'm going to lay them out as I understand them. You tell me if you disagree with any of it.

What you are proposing is that financial professionals be licensed by some voluntary, non-profit group just like like the medical board for doctors or the bar association for lawyers or the board of accountants for CPAs. People working in those professions are required to possess and maintain a license to practice for two reasons:

1. Their work is so complicated that only people who have been competently trained can do it, and

2. Their job is considered an essential service to the public.

Point #2 is especially important because that's why the profession has mandatory regulation for itself. A computer programmer can be certified to a certain level, but it's not actually illegal for him to work without certification. The idea is that if he screws up, his work can be fixed easily and in any case, the computer programming profession isn't about saving the world (most of the time). But a doctor or a lawyer or many other kinds of professionals have such great responsibility on their hands that they must be restrained by a code of ethics to prevent them from doing great harm to the public interest.

I certainly agree that financial professionals wield a great deal of power and should probably have some voluntary industry standards at the very least. But as I see it, for ethical standards to be set and enforced, there has to be licensure by a professional association, and for such an association to exist, there must be some mandate that this profession exists to serve the public which is why there are those ethical standards.

I'm not saying I think that's a bad idea. I just think it's kind of an interesting way to look at investors. They usually think of themselves as serving their own interests and it just so happens that the byproduct of their collective action benefits the public.

Now maybe you didn't mean for this association to set ethical standards so much as professional standards. In other words, the Association of Financial Professionals wouldn't set rules like "You must withdraw in cases of conflict of interest" and would set rules more like, "You must adequately investigate your investments" or "You shall not mix mortgages with other types of investments." This makes financial professionals into something more like a computer programmer who is supposed to adhere to published guidelines but can't be banned from working if he fails to do so. The problem with that is, as I said before, if there's no ethics mandate, then you can't justifiably ban someone from the profession.

Anyway, however we decide to structure it, the main concern I have about your proposal is the part about using the courts. I think courts have a role to play, but I would be much more careful for a few reasons. Firstly, a court case is long, costly, and almost never leaves anyone satisfied with the result. I worked for the Superior Court of Delaware for two years, so believe me when I say that's the reality.

The second problem is that a case of financial wrongdoing could be pretty complicated — way too complicated for a jury to understand. I saw eight medical malpractice cases brought to trial in my time, and I honestly don't believe a single one of them was decided justly. Some of them had results I agreed with, but it was clear to me that the jury was basing their decision on the likability of the doctor rather than the facts. I have no faith in a jury's ability to do any better when deciding a "financial malpractice" case. Yes, you could just have the case decided by a judge or an arbitrator, but the Constitution says that if a defendant wants a case brought to trial before a jury of 12 people, we have to let him do it.

The compromise in Delaware was that cases worth less than $100,000 are required to go through an arbitration hearing first before they can be allowed to go to jury trial. That sort of has its own problems, though. Arbitrators are lawyers themselves, and they all feel a certain solidarity with fellow lawyers. It's just human nature. The result is any case that makes it to arbitration is almost always awarded at least a little money. Likewise, my instinct is that if a case is brought up before a panel of investment bankers, stock traders and other such financial professionals, they will not be able to avoid being influenced by their common backgrounds. One way or another, the interest of the public will not be totally served.

A set of ethical rules set by a professional association seems like a good idea to me, but I think we have to also somehow change the balance of incentives. If we don't do that by altering stock options, then maybe we should mandate that certain clauses be written into executive employment contracts. Or maybe we should require that 25% of a company's voting stock should be owned by the public (boy, good luck getting that one passed). Or maybe something else. I think you and I agree that market-based incentives are the most efficient ways to alter human behavior, and I think there must be some way of changing the incentives around in the financial markets.

[Professor S]

You might be thinking too much about this and not seeing the forest, just the treees. A jury doesn't have to understand the nature of a case. If an ethical board finds against the actions of a professional, that can be used as evidence in the case and replace the need for true understanding. A jury will see that and it will become evidence for the case, simplifying the process greatly.

In the end, it is the threat of action and increase in potential menetary accountability that will pull everyone in line at the top, plus the threat of losing your license to practice will hold everyone in the middle.

Working in real estate, I've seen this up close and personal, it works for licensed Realtors (not Mortgage professionals, obviously). I would use the National Association of Realtors Code of Ethics as the framework for a financial code of ethics.

http://www.realtor.org/MemPolWeb.nsf/pages/COde

You could roll this into MBA programs, for instance, that way it reached those in positions who would require the license but not inhibit the multitide of lower level employees who are not in decision making positions.

In the end, could this have a negative impact on the industry? Maybe for a short while, but would be as negative as not addressing the myria ethical problems with finances? Well, I think the answer to that is in front of us now.

[Xantar]

You might be thinking too much about this and not seeing the forest, just the treees. A jury doesn't have to understand the nature of a case. If an ethical board finds against the actions of a professional, that can be used as evidence in the case and replace the need for true understanding. A jury will see that and it will become evidence for the case, simplifying the process greatly.


But see, I'm not convinced that a jury decides these cases based on the evidence. From what I've seen, it's more of a gut reaction. If the defendant "looks like a nice man," they will give him a little more benefit of the doubt despite what the objective evidence says.

Don't get me wrong. I'm not saying the ethics board is a bad idea. And I certainly agree that it could be a useful piece of evidence. I'm just cautioning you that I don't think it will be a cure to the financial system if the only thing the board can do is provide a piece of evidence at trial. Juries are simply not reliable, consistent enforcers of the rules. As you know, that's part of the reason why medical malpractice in this country is such a mess. This is why I'm trying to think of ways for the ethics board to influence the profession besides just giving a report at trial.

[Professor S]

You make a good point with malpractice in medical law, but I think that could be avoided by having the civil penalties for financial judgements relegated to dollar for dollar. Meaning that the cap of the judgement could not go past the amount of money the accused misappropriated. If you eliminate financial "pain and suffering" from the equation and "statement verdics", I think it becomes more manageable.

Wow.. we're realy kind of working this out, aren't we? I'm impressed and it takes a lot for me to impress myself. ;)

[Xantar]

Well, I do have some technical quibbles, but let's not get bogged down while we have a good thing going. I think we've agreed on some broad principals. Let's say for the sake of discussion that we have some kind of ethics board and that we've defined exactly how to decide monetary awards. I think it would be a good idea to eliminate "pain and suffering" from jury verdicts and simply render it down to a punitive 1.5 multiplier. In other words, if my stock broker does something unethical and it costs me $20,000, the jury would be allowed to award me no more than $30,000 ($20k plus $10k as a punitive award).

I want to raise an entirely separate issue now. I think at its core, we still have a bit of a moral hazard problem. In the above example, my stock broker will get stung pretty badly and he will have a strong incentive not to do it again. But what do you do about the guy is responsible for managing $8 billion worth of assets and who screws up? He knows at this point that there's no way anybody is going to get their money back. To him, $1 billion worth of damage is the same as $5 billion.

When I think of it this way, I confess that my earlier proposal with stocks getting a negative value isn't going to help at all either because the punishment only kicks in after the malfeasance is discovered by which time the problem may have blown up beyond anybody's ability to compensate. People in the financial industry by definition are not putting their own money at risk with their work. I don't have a moral problem with that, but it does mean that the system is vulnerable to people who let greed get the better of them. After all, the fact of the financial system is everybody gets caught sooner or later, and if everyone were acting in their rational self-interest, absurd risks like the sub-prime mortgage meltdown wouldn't happen. But the fact is some people do let greed get the better of their good sense, and so we need to figure out a way to safeguard the public from the consequences of those actions. An ethics board is a good start, but I'm not sure it's enough.

Great. Now I've just gone and convinced myself that the problem is a fundamental flaw of human nature that we will never fix and that nothing the government or private associations come up with will fix it. Help me out here, Strangler.