Skip to comments.Thugocracy Whipsaws Capitalism - intimidate CEOs into keeping quiet
Posted on 03/27/2010 11:03:39 AM PDT by opentalk
The notion that the pain of Obamacare would not really be felt for a few years has always been silly. It won't be fully felt, but he economy is dynamic. Corporations have to plan today for the conditions of tomorrow. More to the point, public corporations with disclosure obligations under the securities laws have to disclose today when developments change their outlook for tomorrow.
Hence, AT&T's announcement that Obamacare will force it to take a $1 billion dollar charge the most alarming (but entirely predictable) bad news in a parade that, the Wall Street Journal's editors note, "includes Deere & Co., $150 million; Caterpillar, $100 million; AK Steel, $31 million; 3M, $90 million; and Valero Energy, up to $20 million."
But here is the most frightful news yet about our new reality: People's Commissar Henry Waxman is now planning to haul the companies before his committee because their disclosures fail to play along with the our Leftist rulers' script that Obamacare "will expand coverage and bring down costs."
As the Journal's editors observe:
Black-letter financial accounting rules require that corporations immediately restate their earnings to reflect the present value of their long-term health liabilities, including a higher tax burden. Should these companies have played chicken with the Securities and Exchange Commission to avoid this politically inconvenient reality? Democrats don't like what their bill is doing in the real world, so they now want to intimidate CEOs into keeping quiet.
Let me echo that. I worked for many years in the U.S. Attorney's Office in whose backyard was Wall Street. If a company like AT&T failed to make a legally mandated restatement of its financial position while continuing to participate in the capital markets, it would be investigated and the responsible management officials would likely find themselves prosecuted while the SEC, concurrently, went after the company and its officiallys in civil enforcement suits. There are prosecutors and investigators who would salivate at the prospect of doing such a career-making case.
If we are now under a system where disclosure gets you a public whipping and other threats by the Powers That Be while nondisclosure promises the ruinous expenses of defending against criminal investigations and civil enforcement, this is no longer anything but a thugocracy.
There is a reason why they hate that ruling. GM issue was before the free speech ruling.
Yes, but they'd also face criminal prosecution for stock manipulation. As McCarthy points out, they have legal obligations as defined by SEC regulations and US Code, to report material financial events. Obamacare certainly qualifies. And these aren't insignificant consequences for not disclosing these adverse events. The civil and criminal penalties can be hefty.
Your point is excellent. Right now is not a good time to be a CEO. They are between a rock and a hard place.
“I hope that one of these CEOs will have the balls to speak out against tyranny. Maybe one will.....”
I think that will happen very soon. Perhaps during this “testimony”. The jackasses in Congress will get schooled.
I shot off an email to Andy as soon as I saw his post:
Re: Thugocracy vs. Capitalism
The treatment of those public companies is a perfect example of a little-remarked-upon danger in Obamacare:
government control of the flow of information.
Recall last September when Humana sent a letter to its Medicare Advantage policyholders. It told them their
plans might be cut under the health care legislation. Obama’s HHS “ordered” the company to retract the letter
and “remove any references from its website”. They said the company was lying and scaring old folks.
Of course, we know the health care bill has now done exactly what Humana said it would.
There was also the study released by the insurance companies indicating premiums would rise dramatically.
Within 24 hours Congress had moved to strip the companies of their anti-trust exemptions. Again, they accused
the insurance companies of lying in their report. They clubbed the insurance companies into submission.
Now those thugs control the whole system. No insurance company or health provider will dare release information
that would displease the master. As consumers, we will only be allowed to hear positive information. Negative
results will never see the light of day. And dissent will be squelched. That’s what happens when politicians
control any segment of the economy.
The Supreme court ruled decisively (in the McCain-Feingold case) that corporations most definitely do have free speech rights, so this will not survive any legal challenge.
This ruling may end up being extremely important.
It isn’t merely a responsibility to shareholders. It is the law, which requires a company, upon learning of a “material change” in future earnings, to disclose this information.
The removal of the deduction for Medicare payments of retirees from a company is pretty clear in the health care “reform” bill, and the projected impact is fairly easy to compute based on actuarial stats. After that, it is merely accounting as to when these losses are realized.
Net/net, I’d expect (in aggregate) that there is a class of companies with retiree healthcare liabilities who are going to have a hit to future earnings of between 5 to 10% when they finish estimating and reporting the loss of the deduction.
If Waxman (and other liberals) want these companies to keep this quiet, they’re asking these companies to play chicken with the SEC and the law.
I wonder if the Supremes saw this new assault on freedom coming and that’s why they FINALLY blew away McCain’s attack on the first amendment.
Some of these CEO’s helped cause the economic crisis that we’re in, so I wouldn’t weep for them.
--Who do you think will pay for this? We will pay. Business is not something in the abstract, or the evil force the leftists and the communists deceptively smear it to be -- business is work, business is people, it is jobs, it is production. When business pays, we pay. Jobs pay. Consumers pay.
You’re right about that point- the businesses will pass the costs on to the consumers. Problem is that the CEO’s helped get us into this mess.
This is not just an abstraction, but absolutely the modus operandi of communists. A best friend of mine grew up under communism in Romania, and the government forced everyone to the black market for the very purpose of making them all criminals.
The other modus operandi of all communists is the development of an unholy alliance with labor groups. Labor becomes the "muscle" - the ultimate enforcers called out to "but kneecaps" when needed.
Does any of this sound familiar?
The point is, nothing he would do could surprise me. I see him as a brutal dictator, waiting his chance. God help us all if it is true.
Obama announces 15 recess appointments
"I simply cannot allow partisan politics to stand in the way of the basic functioning of government," Obama said in a statement.
In February, Democrats fell far short of the 60 votes they needed to push through Becker's nomination. Two Democrats joined Republicans in opposition.
Attempts at amnesty, by reconciliation, or executive order, would not be a surprise in Obama world.
EDIT:Your point is excellent. Right now is not a good time to be a CEO. They are between Barack and a hard place.
I loved your edit! — LOL!
If subpoenas come, defy them under first amendment rights.
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