My friend and well-known banking attorney, Tom Vartanian, and I wrote this op-ed in The Hill today in response to Governor Inslee’s recent proposal that elected officials be criminally prosecuted for making false statements about elections. We think he did not go far enough and should have suggested that candidates and elected officials be subject to the same standards of honesty and punishments that public company executives and bankers are. It just could reignite the lost art of political compromise. Bill Isaac, Former Chairman FDIC & Fifth Third Bancorp
Leadership is in scarce supply these days. So kudos to Washington Gov. Jay Inslee (D) for his courage in proposing the novel idea that truth-telling should be made mandatory for politicians. His proposal falls a little short of the mark in making it a crime only for an elected official to lie about election results.
But we hope there is more than political showmanship at work here and that the governor has a well thought out long-term strategy that doesn’t stop at election results. The natural evolution of his strategy must be to make it a crime for someone running for or holding political office to lie.
That would certainly be a welcome and seismic shift in the world of politics. It would make our elected officials and their political operatives live up to the same standards the rest of us are required to do.
Consider a world where politicians told the truth. They would have to publicly admit that their positions weren’t really their positions, and that if elected, they intended to serve the interests of those who contributed the most money to their campaigns.
Yikes, how refreshing would that be? They might even have to congratulate their opponents for doing something smart, rather than making believe that 100 percent of every word they said was drivel. That could be the first step back toward the dying art of political compromise.
How can we broaden the scale of Inslee’s idea? There is a good model that we know well — the rules that legislators have created for executives of public companies. They are required by law to tell the truth, the whole truth and nothing but the truth to their constituents — their shareholders.
The Securities Exchange Commission’s (SEC) Rule 10-b.5 makes it unlawful for any corporate executive to defraud a shareholder regarding the sale of the company’s securities. Congress and the SEC were smart — they did not leave that standard blurry so that it could be easily circumvented with weasel words that could trick people. They included as violations of the law not only making false statements but also omitting material facts that would be necessary to make the statements accurate.
Imagine this standard being applied to politicians regarding the sale of their candidacies and policies. Political speeches would be shorter, the media would have less to talk about and senseless debates at the dinner table over assertions that were never meant to be taken literally would be avoided.
Character and real policy issues would begin to matter. That would be a refreshing change of pace for all of us who are weary of listening to a barrage of incendiary political accusations and assertions every day. We suspect this change might even reduce psychiatric bills and the consumption of opioids.
To make such a truth-telling requirement work, there would have to be penalties attached to violations of the rules. Why not adopt the same rules that Congress wrote for bank executives? In the first instance, for lesser transgressions, the penalty would be monetary, with fines of up to $1,000,000 a day for each violation. As with banks, where fines are often assessed against the bank rather than the executive, they could be assessed against an elected official’s campaign funds. More serious violations would generate jail terms, just like bankers face for their misdeeds. And as in the banking business, where the FDIC sues managers of failed banks, elected officials could be held responsible for political fabrications that damaged those they represent. Fair is fair, right?
Of course, such a broad, symmetrical approach to truth telling has no chance of being enacted into law by the elected officials who would be subject to them. Gov. Inslee no doubt realizes that and has decided to start with a more reasonable first step, focusing on a pernicious election tactic being honed by losing candidates of both parties. Repeat a litany of factors that suggest the illegitimacy of an election until the assertion gains an air of believability, and then declare yourself not the loser.
If Inslee is suggesting that this strategy creates a cancer that eats away at democracy, he is right. But we hope that he will go to the next step and attack the larger problem by recommending that elected officials be held to the same standards of truth-telling that the rest of us are.
Thomas P. Vartanian is the author to “200 Years of American Financial Panics: Crashes, Recessions, Depressions And The Technology That Will Change It All” and executive director of the Financial Technology & Cybersecurity Center. William M. Isaac is former chairman of the FDIC and Fifth Third Bancorp, and is chairman of the Secura|Isaac Group and Blue SaaS Solutions.