Tuesday, July 21, 2009

Titans of Welfare Show the Queens How To Do It

Way back in 1976, the Bicentennial year of our nation, when we celebrated 200 years of American independence, Ronald Reagan introduced a very popular character into the national lexicon.

The Welfare Queen.

Reagan was one of the best raconteurs on the American political stage, perhaps rivaled only by Lincoln. When he spun his tale of fraud and waste, Reagan described "a woman in Chicago. She has 80 names, 30 addresses, 12 Social Security cards and is collecting veterans' benefits on four nonexisting deceased husbands.... Her tax-free cash income alone is over $150,000."*

People were outraged! Outraged that one woman could do such harm to the system.

According a February 14, 1976 NY Times article, Reagan's story was a bit of a stretch. The Queen in question was prosecuted by the Cook County State's Attorney's office for defrauding the system of about $8,000.

But never mind. Reagan continued on for years with this story of destructive fraud, painting (at least for me) images of greedy ripoff artists - slick mothers driving fully loaded Caddys through Chicago's poorest neighborhoods, loaded with the 1970s precursor to the new millennial bling, waving around large numbers of $100 bills to the masses who got their welfare the legitimate way.

In the Reagan mythology, welfare fraud was the provenance of women. I don't recall him ever mentioning Welfare Kings in the context of government fraud. For him, such criminals were women - mothers - crooks taking full and terrible advantage of "the system."

Well move over ladies - the Titans of the Universe are here to school you on the ins and outs of welfare fraud in today's pro-business environment.

First, you start by getting the very best university education money can buy - and we all know the Ivies are the only place for this.

Then, ride the swift but safe current over to Wall Street and get a high paying job using numbers to bury the risk of certain investments.

Take note of the fact that large numbers of mortgage brokers are selling mortgages to people who have no hope of ever paying them back. Think to yourself - "this is a fine way to make a living!" Bundle those risky mortgages together - including a couple of sound mortgages to minimize the risk - and then offer those securitized mortgages for sale to all.

Make sure that you sell those risky investments to pension funds for teachers; make sure the retirees stack up these investments in their portfolios - and definitely make sure the college funds are fully loaded with your risk.

Then, knowing that these instruments are risky, buy yourself some insurance from a reputable insurance company. Drive for the best deal - make sure you don't pay nearly what the insurance is worth.

Never ask yourself what will happen when all these loans enter into foreclosure. No need to, because we all know housing prices will continue to skyrocket upward forever.

When suddenly, rumors start swirling that these loans are in reality very bad, and people start wanting their money - know that the fact you've stocked your books with billions in bad debt is not at all relevant.

Leverage is all-American. Leverage is the only pillar of our economy that matters - that we have all that debt should never be a factor in determining the health of our company. (Toxic debt?! So foolish to consider it in that way!)

But oops! Housing prices are tanking! Our business model, which seemed so mathematically sound, is failing for some reason.

Time to look to the source of all solutions - the feds! Work your B-school connections - make your former colleagues include you in meetings about the disposition of an important insurance company.

You'll be well rewarded for your efforts. A massive government entitlement program will be developed to provide you with capital needed to exist - and with the funds to pay for contractually obligated bonuses you so very much deserve.

In a sharp twist from Reagan's world back in the 1980s, government today is the solution to the problems of business - not the problem. The government saved the financial sector last fall - paving the way for the Titans of Welfare to have one of their most fabulous years - ever.

And of course, no financial sector bailout is worth anything without mention of bonuses (auto sector bailout - different story - those contracts needed to be renegotiated prior to the release of funds - but we all know Wall Street is a different universe, subject to different rules.) The fabulous year the financial sector is having in 2009 means the financial sector, which exists solely thanks to the federal bailout, can reward itself extravagantly with some of the best bonuses - ever.

So remember Queens - the Titans know just how to manipulate the system in ways that shower them with money instead of becoming dragged down with a criminal investigation. Make important connections with the power brokers throughout your career - and work them hard when your business acumen has failed you. You'll never be held accountable for any mistake ever - and you'll be richly rewarded with taxpayer loot.


*As quoted in a 2/14/1976 NY Times article - too old for a hot link!


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