Running a Healthcare System

If some of the large hospital systems in New Jersey were managed like some of the large Wall Street firms, supersized commercial banks, and government agencies that contributed to derailing the economy, we’d all be in an even worse pickle.

This was brought vividly to mind up close and personal this week. When Priscille was admitted for surgery, I saw professional healthcare providers at work – all the way from a highly-trained surgical team, to nurses, to nutrition specialists, to personal care assistants, right down to the diligent people who sweep the floors and empty the waste baskets, etc., etc., and many others that I don’t even know about.

It may seem that there is no comparison between the operations of the U.S. financial system and the U.S. healthcare system, but there is a significant resemblance – not in what they do, but in how they do it. In the former, it seems that far too many people just didn’t give a damn.

And that’s all the difference in the world because, for over a week now, I’ve observed part of a healthcare system in Passaic County where people who take care of other people really do give a damn.

It’s not mere coincidence that St. Joseph’s Regional Medical Center in Paterson runs an efficiently tight ship. That hospital operates under the direction of the Sisters of Charity of St. Elizabeth, a religious order.

Now, don’t misunderstand: I’m not saying that a hospital has to be run by nuns to be efficient. But I’ll wager any day that if the boys running the U.S financial system and the people who abused it had operated under a code of conduct at par with a religious order of nuns, we wouldn’t have been listening to President Obama last night telling us how he proposes to pull us out of the economic mess this nation is in.

Thanks for checking in, and take care of yourselves. You deserve it.

Ugh! Less Than Two Months to Tax Time.

Residents of Bridgewater get to pay their income and real estate taxes one way or another. If you work, it’s through income tax withholding and, if you are retired or in business, it’s via a check to Uncle Sam every quarter for estimated tax payments.

As for real estate taxes. . . Well, if you own a home in Bridgewater you don’t need me to remind you about that! Even if you rent, though, you still have to ante up. The tab for real estate taxes is hidden from sight, buried in the cost of your monthly rental payment.

Everything being equal, we should be happy to pay our fair share of taxes. But everything is far from being equal, because the tax system is broken (‘broke’ as they like to say in the business world). Taxes are way too high, and expenses are out of control, especially at the state level and within New Jersey’s school districts.

At church services this weekend, the topic of the homily was about lying. Lying, the priest explained, is a distortion of the truth. Yet, it’s an offense that everyone commits regularly. There are varying degrees of lying, of course. For example, a boy caught with his hand in the cookie jar at home hasn’t erred to the same degree as the Wall Street investment advisor caught with his hand in his clients’ multi-million $ cookie jars. Umm. . . I wonder if Bernie Madoff liked cookies as a kid.

This priest has a sense of humor. “Do you know,” he asked, “how you get a person to pay his taxes?” Easy, he explained. “You just appoint him to a White House Cabinet post.”

I like that.

The Bludgeoning of the American Character

Not long ago, as you may remember, former Republican U.S. Senator Phil Gramm, who was then the chief financial guru for the McCain Presidential Campaign, called us “a nation of whiners.” For that ill-timed and inaccurate remark, he was called upon to resign his post. Months later, but not to be outdone, Eric Holder, U.S. Attorney General in the Obama Administration recently followed up by calling us “essentially a nation of cowards.”

How does it feel to have two hi-level Washington elites staring down their noses at the American populace?

When Senator Gramm was Chairman of the Senate Finance Committee, he dismantled Depression-era regulations which had kept commercial banks and Wall Street investment houses strictly separate. Gramm’s reversal of those legal requirements proved to be a principal causal factor of the current economic meltdown. Since retiring from the Senate, Gramm was rewarded with a top executive position at UBS, the European financial conglomerate.

In the most recent assault on the American character, Attorney General Eric Holder claims that we are “a nation of cowards” because, according to him, we are afraid to honestly and openly engage in a discussion on the issue of race relations in the public square.

Previous to his current appointment, Mr. Holder was Deputy Attorney General in the Clinton Administration under Janet Reno. Among other duties, he was responsible for vetting President Clinton's last-minute pardons.

Mr. Holder justified and blessed one of the most egregious of those pardons, that of Marc Rich, an international commodities trader. Rich had been indicted by then U.S. Attorney Rudolph Giuliani on charges of tax evasion and illegal trading with Iran. Rich never stepped into a U.S. court room. He remained ensconced in Switzerland, away from U.S. justice, and the FBI placed him on its list of Most Wanted people.

Marc Rich’s family donated generous sums to the Democratic Party and to the Clinton Library while Clinton was still in office, leading to allegations that Rich had purchased his pardon. Despite these data, Clinton’s Deputy U.S. Attorney General Eric Holder justified the pardon for Rich. Was Holder simply acting as Clinton’s toady? I wonder just who the cowards are.

Within the Washington Beltway, there exists a coterie of elected and appointed officials who act as princes and princesses of the realm, and who do the bidding of the king. Many of them are strongly biased towards the rest of us whom they consider vassals. Hence the insouciance of these courtiers, as they label ordinary American citizens “whiners” and “cowards.”

New Bridgewater Eatery

Last Friday, on the eve of Saint Valentine’s Day, Priscille and I decided to celebrate by dining at the Milano Grille restaurant. It’s in Bridgewater, on the south side of Route 202/206, just a few hundred yards past the gated sanofi aventis complex, and is under the same ownership that runs Mia Sorella in Manville.

I’m glad that we made reservations, because the place filled rapidly after we were seated. This is undoubtedly one of the best spots for your eating pleasure in Bridgewater. Not only is the food superbly prepared and presented, but the entire staff of Milano’s is on top of every detail that a diner could expect to find in a fine restaurant.

The Italian authenticity of the serving staff, the friendly ambiance of the dining area, the décor, and the reasonably-priced choices all contributed to our having a delightful Valentine’s Day celebration.

And the food . . . yes, the food…. Between the regular menu and the daily specials, you will be delighted at the selections. If good Italian fare is one of your gustatory delights, then the Milano Grille is for you. Remember to BYOB.

The ‘House of Cards’

I’m sitting in my family room on Thursday evening, watching a two-hour documentary narrated by David Faber of CNBC, looking into the causal factors of the real estate debacle.

It’s anything but a pretty picture: the best analogy that I can think of is that of the relationship between a john and his prostitute. Each knows or should know that what they are doing is not going to work out in the long run. But the financial rewards are just too good: They serve as a deadening sedative.

That may sound crude and it is. But it was just such a perverse relationship between home buyers, mortgage originators, and the securities industry which led to the current financial mess.
One of the tricks turned was the practice of not verifying borrowers’ income. Mortgage originators simply took a person’s word about his/her income. You could lie. Nobody cared. One technique used is called “stated income.” Just tell the loan originator what your income is: If you made $50,000 per year, you could declare your income to be four times that amount. Nobody checked.

It didn’t matter to the person who wrote the loan, because, as one person being interviewed on TV said, “I never made a mortgage that Wall Street wouldn’t buy.” The Street didn’t care either, because these below-500 FICO score mortgages were simply repackaged and sold as very complex collateralized debt obligations to pension funds, hedge funds, and other large investors who didn’t understand what they were buying.

There were also governmental institutions involved in this financial flesh industry – The Federal Reserve Bank, The Senate Finance Committee, and The House Financial Services Committee. Starting in the early 2000’s, the Chairman of the Fed lowered and kept interest rates down too long and did not discourage what he termed “alternative forms” of lending.

Meanwhile, legislators on Capitol Hill encouraged Fannie Mae and Freddie Mac* to lower loan requirements and to push out more of these fractured mortgages. As David Farber said tonight, “Nobody wanted to stop the party.”

Earlier this week, elected officials of the two Congressional committees could be seen on TV, as they raked bankers over the coals for their salaries, bonuses and incentives. It reminded me of a john abusing the source of his income.

Got to go now. I want to concentrate on the balance of the documentary. Thanks for checking in. Take care of yourself. If you are a responsible citizen, you deserve better than you are getting.


*Clarification: (2-13-09, 9:00 p.m.) Fannie and Freddie did not issue loans directly to consumers. Instead, they purchased bundles of mortgages directly from banks, thereby providing more cash to those banks so they could write even more mortgages. That in itself is not necessarily a problem. Serious ethical issues arose when it was reported that executives from Fannie and Freddie put pressure on bank executives to write large numbers of questionable loans, in essence telling the banks, “Don’t worry about those mortgages; just keep writing them, and we will keep purchasing them back from you!”

Smart Guy Jumps off Plane

The deepening financial crisis in America reminds me of how so many smart people who thought they had everything under control guided so many other people and institutions off the edge of a cliff, just like lemmings. This came vividly to mind as I read the following excerpt from a new book by John Ortberg.

“Smart people mess up as easily as the rest of us. Three men are in a plane: a pilot, a Boy Scout, and the world’s smartest man. The engine fails, the plane is going down, and there are only two parachutes. The smart man grabs one. ‘I’m sorry about this,’ he says, ‘but I’m the smartest man in the world. I have a responsibility to the planet,’ and he jumps out of the plane.”

“The pilot turns to the Boy Scout and speaks of how he has lived a long, full life and how the Boy Scout has his whole life in front of him. He tells the Boy Scout to take the last parachute and live. ‘Relax, Captain,’ the Boy Scout says. ‘The world’s smartest man just jumped out of the plane with my backpack.’”

There is a message in this about all those smart guys who were pumping up the financial bubble to the point of bursting: Some of them are now in Washington advising the President and Congress.

‘Nuff said.

Archibald Cox II, Plainfield’s Native Son

Libraries are magnificent places. They are full of dreams and living history jumping out of books. The Bridgewater Library in particular – jewel of the Somerset County Library system – exemplifies what an effective public library should be.

After leaving with the book, Plainfield, New Jersey’s History & Architecture, by John Grady & Dorothe Pollard, I discovered a notation about one of Plainfield’s famous native sons, Archibald Cox II. The book is easy reading. It’s loaded with photos of Plainfield’s past and short explanations near each picture.

On page 49, I discovered a 1997 photo of Archibald Cox II, one of seven siblings who all lived in a big estate home on Rahway Road. Cox attended the Wardlaw Country Day School in New Jersey, followed by St. Paul’s college prep in New Hampshire, before progressing to Harvard and establishing his law career in the Boston area.

Cox eventually joined the Harvard faculty and established close ties with the Kennedys. He became an advisor and speech-writer for Senator John F. Kennedy. After JFK was elevated to the presidency, Cox became solicitor-general in his administration.

However, the most famous single moment of Cox’s career would come years later when, as Watergate special prosecutor in the Nixon administration, he was fired in what notoriously became known as the “Saturday Night Massacre.”

U.S. District Judge John Sirica had ordered Nixon to comply with Cox’s and the Senate Watergate Committee’s demand to release the Watergate tapes, but Nixon refused. Instead, Nixon counter-offered to have a senator listen to the tapes and to give Cox a synopsis of them which would be prepared with help from the White House.

Cox insisted on having the full tapes. As a result, a chain reaction of political blood-letting began when, on October 20, 1973, Nixon ordered his Attorney General, Elliott Richardson to dismiss Cox. Richardson, a Boston Brahmin, refused and resigned.

Next, Nixon called upon his Deputy Attorney General, William D. Ruckelshaus, who also refused and was promptly fired. Nixon then called upon the next highest ranking Justice Department official, Solicitor General Robert Bork who quickly carried out Nixon’s order and fired Cox. In 1974, the Supreme Court upheld Sirica’s order for release of all tapes and, under threat of impeachment, Nixon resigned.

Those were paradoxical times. Not only was there deception at the highest levels in the White House, but there was also accountability and integrity by other high-level people in Nixon’s administration who would not yield to corrupt practices under pressure from the president who had appointed them.

New Jersey can be exceptionally proud of Plainfield’s Archibald Cox II. Where, in New Jersey and in Washington today, are the people in high public office with his and his colleagues’ fortitude and political integrity?

The Cards Keep Falling

I feel empathy for President Barack Obama tonight: Too many of his nominees for high-level administration posts have failed to pass muster.

The most recent of his hand-picked designees, former Senate Minority Leader Tom Daschle, withdrew his name this afternoon. He was expected to be named to the post of Health and Human Services Secretary (HHS). Daschle, a close friend of Obama, was to rewrite health care policy in the U.S. but ran into income tax issues. (His wife, Linda Hall Daschle, is a registered Washington Lobbyist.)

Preceding Daschle, but only by hours, was the decision by Nancy Killefer to also withdraw her name for approval as the Administration’s Chief Performance Officer. This is a newly-created job with the rank of Deputy Director within the Office of Management and Budget (OMB). Killefer was expected to scrutinize and establish controls over government spending.

Both Daschle and Killefer withdrew their names because questions came up about personal tax obligations. On January 26, however, similar tax problems did not stop the Senate from approving the appointment of Timothy Geithner, former chairman of the Federal Reserve Bank of New York, to the job of Treasury Secretary in the Obama Administration.

It seems that just a few days have drastically changed the landscape for Senate approval of Obama nominees to top administration posts. If Geithner were to come up for approval now, it’s unlikely that he would make the cut.

Earlier,in the first week of January, Bill Richardson of New Mexico, a strong Obama supporter, also withdrew his name from consideration as Commerce Secretary due to a pending investigation originating in New Mexico. The administration announced today that it now hopes to fill that vacancy with U. S. Senator Judd Gregg, a Republican from New Hampshire.

New Jersey is not the only place where ethical problems seem to abound.