The Big Government that Wouldn't

In her "Diary of a Mad Law Professor" column for the November 3 issue of The Nation, Patricia J. Williams decided it was time to remember a few things about Eliot Spitzer other than the sex scandal that forced him to resign. Come to think about it, her column is not just about Spitzer; and also about the whole damned (and far more scandalous) Bush Administration. Here is the way she tells the story:

Some three weeks before New York Governor Eliot Spitzer was forced to resign his office in disgrace (sex! scandal! floozies!), he published an op-ed in the Washington Post. Titled "Predatory Lenders' Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers," the piece expressed Spitzer's concern that for several years there had been a marked increase in predatory lending practices, including distortion of terms, surprise balloon payments, hidden fees and deceptive "teaser" rates. These practices, he wrote, were having a "devastating effect on home buyers." In addition, the sheer number of such transactions, "if left unchecked, threaten...our financial markets." To those in the know (OK, those few egghead "elites" not enthralled by the birth of the Brangelina twins), the situation loomed so egregious that the attorneys general of all fifty states, both Democrats and Republicans, lodged suits against the worst predatory subprime lenders. A number of states, including New York, passed laws to rein in such practices.

The response was shocking, and not nearly wellpublicized enough: the Bush administration employed a little-used 1863 law to annul all state antipredatory-lending laws and, if that wasn't enough, to block states from enforcing their own consumer protection laws in suits against national banks. Thus, when Spitzer tried to open an investigation into discriminatory mortgage lending in New York, the administration actually filed a federal lawsuit to block it. These interventions were so extreme and so unprecedented that the attorneys general and the banking superintendents of all fifty states came together to oppose the rulings unanimously. But to no avail.

It is worth quoting the last paragraph of Spitzer's op-ed in its entirety: "When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers."

Spitzer wrote his article eight months ago, in February. To some, it might be tempting to characterize his observations as prescient. It's probably more accurate to say that Spitzer just had his eyes open (if not for Mata Hari)--and he was not alone. Nobel Prize winner and New York Times columnist Paul Krugman has been sounding the knell for a very long time. But, frankly, I worry that even now there is too little attention--in media or in political debate--to the incremental ingredients of this crisis. For it is not merely a failure to regulate Wall Street; it's a failure to govern at all. The FDA is packed with industry insiders who seem content with the gross understaffing of inspections bureaus. Animal feed laced with melamine was imported from China, consumed here and has now entered the human food chain. Nontherapeutic experimentation with pesticides on humans has been given the nod. Pharmaceutical companies have gotten approval for drugs like Vioxx and Fen-Phen that should never have been put on the market. Efforts by farmers to do voluntary testing for mad cow disease have been blocked by the Agriculture Department. The Justice Department's civil rights division has been gutted. The FCC has hacked away at public access to the airways and OK'd obscene concentrations of media power. The Transportation Department is underfunded beyond all conscience, and the toll has been tragic: collapsed bridges, breached levees up and down the Mississippi and nearly unnavigable railroad tracks. And FEMA... well, we all remember FEMA.

This story appeals to me for a variety of reasons. Obviously, it would be nice to read it as a conspiracy theory of a corrupt Wall Street getting Spitzer out of their way "by any means necessary." One can also read is a Cassandra story, with both Spitzer and Krugman singled out as Cassandras (although their voices are far from the only ones to have been ignored). However, the greatest impact of this story resides in the middle of that last paragraph, which suggests that, since George W. Bush took the oath of office, we have been laboring under a government that has failed "to govern at all." For eight years we have been enduring the consequences of turning our country over to individuals whose self-interest is so unenlightened as to make Adam Smith spin in his grave and who neither know nor care what the very descriptions of their jobs are, even when those descriptions reside in our very Constitution.

Williams is generous enough to acknowledge Sarah Palin's observation that we should not be arguing about causes when we are in the midst of a crisis; but I think this misses a fundamental point, best recognized by Richard Neustadt and Ernest May in this historical analysis of Presidential decision making. This is the precept that you cannot strategize your way out of a mess until you have a clear understanding of how you got into it. This is not great profundity. History is littered with disastrous decisions that emerged from making the same mistake twice, and the only argument seems to be whether the consequences were tragic or farcical. Thus, if our current catastrophic situation is a consequence of large sectors of our governmental institutions simply failing to do their jobs, we need to be looking towards Election Day in light of whether or not we can return to the Oval Office a leader who will restore a Government that is actually working on behalf on the American population, rather than just thinking up and packaging innovative ways to feather its own nest. In that respect we may very well be in the midst of tragedy, because, in the privacy of the election booth, we really have no way of knowing whether that candidate we select will have the will to restore our Government to what it should be or the power to implement such a restoration. No wonder Marx seems to be gaining popularity among European readers!