Transparency. It’s la mode juste; the new black. Everyone believes in it or is obliged to say they do. In the September Senate Banking Committee hearings, Treasury Secretary Hank Paulson called for transparency in the purchase of troubled assets under the TARP program. “We need protection. We need transparency. I want it. We all want it,” he told lawmakers. The following day Fed chairman Ben Bernanke also called for openness in the government’s role. “Transparency is a big issue,” he said.
Yet Bloomberg News reports that the Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. It seems that in the two months since the $700 billion bailout the Federal Reserve has lent out several times that amount in separate programs that did not require Congressional approval. No one outside of government seems to know where the money is going and what collateral was put up against it.
Reuters reports Sen. Maria Cantwell, a Democrat from
As if more regulation weren’t enough headwind to face in a downturn, CEOs will also have to deal with a major sea change in labor law. The Employer Free Choice Act, which Jack Welch described recently as the biggest threat to enterprise competitiveness that he has ever witnessed, should actually be called the Employer No Choice Act. Law professor Richard Epstein, a frequent contributor to CE on legal issues, outlines what’s at stake beginning on page 36, and argues that the proposed law is anything but transparent in its aims and could lead “to the partial nationalization of unionized firms.”Finally, in this issue we launch our first wealth creation index, a ranking of almost 280 CEOs who have been running their public companies for at least three years. The Wealth Creation Index uses measures based on economic margin to determine how much real value-as opposed to accounting value-has been created. Briefly, economic margin measures the degree to which a company is making money over and above its risk-adjusted cost of capital. Much about the companies in the rankings has changed since the end of the three-year ranking period (August 2008). Nonetheless, the rankings indicate the companies’ fundamental abilities to create economic wealth during that time and those abilities, relatively speaking, still remain.