How to Hold Government Accountable: The Board of Boards

By April 15, 2013 March 3rd, 2016 Blog, Resources

Remember the S&L RTC, the failure of 1600 banks in the 90’s, Enron, Tyco, and WorldCom and now the subprime debacle?

You would expect that with all the focus on corporate governance, billions spent on Sarbanes Oxley, the new regulatory and accounting reforms, we could have prevented the last and most catastrophic
financial disaster.


Even with all these new reforms, we just experienced the worst financial meltdown since the Great Depression. With the passage of Dodd/Frank and other regulatory reforms, the result has been more controls, more reporting, more laws to keep the lawyers and politicians pontificating and well fed for decades.

It’s estimated that Sarbanes Oxley cost American business billions of dollars, restricted business
expansion (IPO’S down) and moved businesses to other countries (UK, China, etc.) If we did a cost
benefit analysis, we’d be challenged to show the “cure” was worth the cost. After its tenth anniversary, no one has been prosecuted under Sarbanes Oxley!

Who are the benefactors of these destructive financial scenarios?

Politicians who want to demonize businesses and gain more power and votes by promoting regulatory
reform. They deflect attention from their own complicity (Even though Freddie Mac and Fannie Mae
enabled the subprime debacle and both were involved in major corporate governance scandals, neither
were touched by regulatory reform, and squeeze more campaign funds from the businesses they
demonize. Who else benefits? Accountants, attorneys, compliance officers, consultants, and
governance experts (there’s actually a list of 100 most influential (Rock Stars) of Governance. The media who can raise ratings by capitalizing on their predictable script- catch the greedy business guys, force business to testify before a kangaroo court of politicians, show those affected employees who lost their pensions or jobs, shareholders who lost value, then the big one: encourage voters to support a bailout for the sins of politicians and the fat cats. This enables the politicians to gain more power, businesses with clout to carve out their niche and service providers to charge large fees. Great game for top end players.

Who loses?

American taxpayers, employees, small business, shareholders and just the little people lose big-time. Average people who pay the bills for the FDIC, taxes and more worthless regulation. Honest businesses and small banks pay the price for more regulation and paperwork, shareholders lose their retirement, and employees are laid off. Despite all the tough rhetoric, no big bank CEO was prosecuted for the recent financial meltdown.

This scenario happens every 10-15 years no matter which party is in power. So what is the solution?

The Board of Boards

Christopher Cox, our former head of the SEC made a profound statement. He said that the federal government is not subject to the same corporate governance principles they insist public companies adhere to under penalty of law. What are these basic principles of governance?

Transparency-Sarbanes Oxley, full disclosure and shareholder rights all focus on telling the truth in a simple way so those affected can understand the issues. Public companies must file public documents signed by public accounting firms, CEOs and directors must sign documents, and full disclosure is important.

On the other hand, does anyone understand government accounting? Do we know the numbers? Does
anyone understand the reports of the GAO? The CEO and CFO of a public company would be fired if
they displayed this lack of transparency to public shareholders.

Stewardship-The main duty of a director is to act as a fiduciary steward of the assets entrusted by shareholders. Who in the federal government is a faithful steward of our precious assets and taxes? Social Security and Medicare are going under and the federal debt is expanding exponentially without any consideration of the effect on future generations. We may lose our country because of a lack of basic stewardship by our government leaders.

Accountability-in a public company the board, CEO, CFO and others are held strictly accountable. Directors, CEO’s and CFO’s are fired, fined and put into prison. No one has been fired in the government. In fact, the chief enablers of the subprime fiasco and failure of Freddie Mac and Fannie Mae, Barney Frank and Chris Dodd are not being held accountable. In fact they are presenting themselves as the champions of reform who are going after the greedy businessman. It’s like having Madoff promoting Madoff Jewish Fund Raising Reform!

So there is no transparency, stewardship or accountability in our government. Every few years because of this dysfunctionality, there’s a financial meltdown, a bailout from taxpayers, more regulation, politicians and regulators return to law firms and public companies and the government continues without any corporate governance. Everyone gets more power and money while the average citizen gets screwed.

So what’s the answer? The Board of Boards

Every major organization needs the thoughtful, accountable oversight of a Board of Directors. The
government oversees our economy. Who oversees the government? No one. We need a Board of
Boards to oversee the largest organization with the most impact on all of us. We are the investors,
customers and victims of USA Inc.

Let’s create a Board of Boards to oversee the government and report to us- the voters, taxpayers and stakeholders. The BOBS must be apolitical and have no official power or authority or it becomes just another worthless commission.

How do we keep the BOBS above the politics?

Make it a bully pulpit board, not an official agency that meets monthly for two hours on television to disclose and report on government transparency, stewardship and accountability. Televise the meeting during prime time so average voters can see the meeting.

Pick directors with credible reputations who have no skin in the game. (Like America Idol picks judges) No political voting so this group can be totally independent and diverse.
Possible candidates: Warren Buffett, Boone Pickens, Jack Welch, Bill Gates, Andy Grove, Rick Warren, Donald Trump, Jesse Jackson, Bill O Reilly, Tom Brokaw, Sarah Palin, Elliot Spitzer, Newt Gingrich, Bill Clinton, Joe Scarborough etc. In short, a mix of leaders from business, political, media, spiritual, philosophy, etc. who have credibility, different backgrounds and diverse opinions.

BOBS would discuss the issues and performance of the President, Cabinet, Judiciary, regulators, and the wisdom of legislation or key issues and give their opinions and final vote every month. They would also pinpoint who is accountable and cut through the noise, complexity and BS to make their observations and recommendations. Politicians would be called in to report. No subpoenas. If they don’t show up, the BOBS would fill in the blanks.

The American people need to see how corporate governance really works- then they can vote on the
issues, values, players and allocation of resources every month based on the two hour televised meeting of the Board of Boards. Just like American Idol. The BOBS discusses and votes, then the people vote by phone or text.

America needs and deserves a Board of Boards because government checks and balances are
dysfunctional, information is distorted and we only get to vote once every four years. We have all the processes, information sources, regulations, laws, etc. in place. We just need to apply basic corporate governance to our government.

The Board of Boards will be the most popular reality show on television. More importantly, we will raise the level of understanding and discourse and marshal the power of public opinion.

If we do not apply good governance to USA Inc., the United States will become further polarized,
ungovernable and continue to decline as a world power.

Larry Cabaldon
Boardroom Performance Group