What Citibank Can Learn from the House Bank
Rowe, Jonathan
What Citibank Can Learn from the HouseBank And what the insulated media can learn from my bounced check by Jonathan Rowe media continually channel the nation’s anti-establishment impulses...
...Curses, FOIAd again One reason the payroll story proved so attractive to Washington reporters was that it offered them the opportunity to look like tough investigative reporters with a minimum amount of effort...
...But the House is investing a lot of staff time and taxpayer money dealing with a symbol: five full months for the ethics committee to piece together the accounts and untold additional days for individual members and their staffs...
...People often brought their families and left the meetings early in the afternoon for sightseeing or golf...
...And if the media didn’t have ample medical coverage, they rnight bring more ardor to the issue, too...
...High on the list of what Newsweek called Congress’ “baronial” perks, for example, are subsidized lunches in the members’ dining room...
...Or take the free parking on Capitol Hill: The press gets free parking there, too (in the choice lot right behind the Capitol), and this perk’s at taxpayer expense...
...By contrast, a Money survey found that 88 percent of Americans, think U.S...
...These checks were covered by the pool...
...I once worked in the field of state tax enforcement, and at the annual meetings, corporate tax reps outnumbered the state officials by a healthy margin...
...That’s not exactly Woodward and Bernstein...
...And it’s hard to think of a bigger gap between real and advertised prices than in the case of home mortgage loans, where you end up paying thousands of dollars in “points” and other fees...
...with that kind of money, he can write big checks all month, bouncefree...
...What were they thinking about as they gathered their money...
...Both George Bush and Newt Gingrich have trashed the Canadian system, which is a form of national insurance...
...What should come of the House bank scandal...
...Maybe for the reason a fish doesn’t see water...
...Unfortunately, there’s still little pressure on Congress to take action that would lighten it...
...Then a Roll Call reporter saw the most recent report and wrote the story...
...Such tales are much less exciting than those of check-kiting congressmen...
...House payroll overdrafts have existed at least as far back as the early fifties, when Republicans controlled the House...
...Despite the brief flurry of attention last year, for example, credit card rates remlain exorbitant...
...We can do better than that,” this reporter said...
...The Washington Times and USA Today jumped all over it, and the rest of the press soon followed...
...The payroll office didn’t pay interest, the way a bank would...
...If these two Republicans weren’t coddled in the cocoon of the most socialized medical system in the United States-the one that takes care of elected officials-they might be more in touch with the plight of millions of Americans who don’t have insurance or who fall through the cracks of the coverage they have...
...Crystal left a job at Fortune magazine after he was pressured to revise his estimate of the gargantuan pay of Steven Ross, chief of Time Warner (which, of course, owns Fortune...
...It would take at least five of Evans and Novak’s “pampered pols” to equal the estimated $9OO,OOO-plus income of Novak himself...
...Why didn’t he blow the whistle before now...
...The biggest trouble with “symbolic” stories like the House bank scandal is that they generally don’t lead to solutions to, or even a better understanding of, the larger problems they are intended to symbolize...
...Rep...
...As documented in a recent report by the Center for Science in the Public Interest, reporting on business can be as perilous as voting against the realtors, the drug industry, or AIPAC...
...Pat Buchanan, who reviled the “check-kiting boodling congressmen,” makes more than $800,000...
...So why don’t the media see it...
...By now, readers of the daily press probably know more about the House payroll system than they do about their own banks...
...the interest they would have received at a commercial bank would have more than paid the penalties for bounced checks...
...City Council, a Post Metro reporter asked me to lunch one day...
...Same for Newt Girigrich, the Minority Whip for whom the press has served as valet on this issue...
...The shareholders lost $99 million in 1991,” Crystal notes, “but the company was hugely profitable under the definition of Drofits used for Mr...
...Press accounts of the system imply that members of Congress were watching their accounts like currency traders in Zurich...
...In fact, one might well jump on the press for ignoring a problem that was literally right under its collective nose for years...
...Some members, such as Mrazek and Davis, apparently were aware of the vacuum and exploited it to get free loans...
...In this, members were doing pretty much what millions of Americans do with credit cards all the time: buy now and pay within 25 days, thereby avoiding interest...
...Unlike the overdrafts at the House payroll office, such practices cost the public real money...
...The old refrain of the goo-goos happens to be true: Good people aren’t going to run for office if they face getting dragged constantly through this kind of muck...
...With its hidden cameras...
...Any American who bounced two or three sizable checks would risk felony charges,” echoed Newsweek, upping the ante...
...Few also worry about losing advertisers...
...The media’s excuse for this lack of curiosity is that the House banking scandal is a symbolic issue pointing to deeper problems in the government...
...Reporters have noted them in passing, like obligatory balancing quotes that are recited and then dismissed...
...Ross’s bonus”-at least $716 kllion before taxes...
...Or a lifestyle cut either...
...Nobody wanted to appear an apologist for those disgusting politicians...
...An example of the danger of business reporting is the story of Graef Crystal, the noted authority on executive pay whose bestselling book, In Search of Excess, won him few friends in comer offices...
...But that’s only half of the message, whether the issue is the House bank or the House childcare center or the House health plan...
...Common, too, in the private sector is the kind of petty waste that causes such a stir when found in Washington...
...The Canadian system controls costs by letting people die,” Gingrich has said...
...Compared to covering government, reporting on the corporate world is difficult...
...Rarely are these impulses directed against those who stymie and corrupt that government with money and influence-those who often cause the abuses that people look to government to correct...
...But there’s another reason why stories like the House payroll office are so attractive: They’re safe...
...The money for these trips doesn’t come from the invisible hand...
...It’s on Kay”-meaning, of course, Post owner Katharine Graham...
...And it’s only a footnote to the pay of Time Warner head Ross himself, who, it turns out, derives large bonuses from a formula that defines corporate profits differently for him than for the shareholders...
...After cultivating viewer outrage with shot after scandalous shot, the report switched to the model day care center available to members of Congress, at a very reasonable fee...
...But the effect on them is exactly the same as that on Congress: to dull their sense of personal urgency regarding the financi a1 problems that millions of Americans face...
...Rush Limbaugh, the right-wing talk-radio host who gorges on congressional misdoings, pulls in over a million...
...Reporters are certainly authorities on the subject of subsidized lunches...
...That’s false-the Canadian system costs less than America’s, and people there are generally happy with it...
...doctors charge too much...
...The remarkable thing about the perks was that reporters get many of them too...
...Still, the bigger question is not how quickly the Crystal is now a contributor to a Manhattan weekly called the New York Observer, and in a recent column he showed why the nation’s corporate media prefer to keep the public focused on Congress...
...it has not been shown that taxpayer funds were used...
...And if the media were a little less absorbed in the exotica of Washington and a little more concerned with the consumer abuses that affect the public every day, that point would be absolutely obvious...
...Washington journalists were slow to report the outrage because, heck, many of them were making more than congressmen did...
...Several members made the plausible argument that they actually lost money...
...And Walter Pincus actually did a small story for The Washington Post back in February 1990, based on a GACl report, that focused on the abuses of former Sergeant at Arms Jack Russ...
...Not too long ago, “PrimeTime Live” did a segment on the deplorable conditions in day care centers around the country...
...I suggested my usual repertoire of greasy spoons, such as the old Bassin’s cafeteria at the corner of 14th and Pennsylvania...
...With no written guidelines, the system was ripe for abuse...
...GAO reports on the office have been public since 1977...
...For government officials, this would be called a “junket...
...Tom Coleman, a Republican from Missouri, told a New Yorker writer that he didn’t use the House payroll pool because his wife thought it was crazy to forgo the interest his money would get at a comercia1 bank...
...Take health insurance...
...But this doesn’t mean every member did...
...Bad feelings about America’s financial institutions were a primary subtext of the House bank imbroglio...
...If it never occurred to them that something was amiss, how could they be so sure that the members themselves knew...
...This is one reason why inefficiency and waste in the private sector generally go unnoticed...
...In practice, the advances often were for just a few days...
...But the corporate stories tend not to get coverage, as they often involve a hell of a lot more work...
...When I worked on the staff of the D.C...
...She gets to subsidize a lot of eating, as do the owners of most of the major outlets (which means their readershiewers and advertisers do...
...Rather, the lesson is going be to balance your checkbook...
...The message: You should be mad that Congress provides better for itself than it does for the taxpayers...
...There is no Freedom of Information Act, no open meeting laws, no free press facilities of the kind that Hill reporters get...
...What Citibank Can Learn from the HouseBank And what the insulated media can learn from my bounced check by Jonathan Rowe media continually channel the nation’s anti-establishment impulses against the government...
...It comes from yours and mine...
...And the reason lies less with Congress than with the way the media-large and small, inside and outside the Beltway-work...
...A number of years ago, for example, The Wall Street Journal mentioned the story of a corporate Sununu-a recruiter who set up interviews for jobs that didn’t exist just so he could fly to New York at company expense...
...Crystal’s book recounts many examples like the Time Warner case...
...I don’t begrudge the Washington media their nice lunches or parking privileges or their stays in the better hotels...
...The House payroll office brought these anxieties to a flash point...
...The system had no oversight, however, apart from the Sergeant at Arms, who was an avid checkbouncer himself (31 personal checks worth almost $105,000...
...The Post took to quoting the radio talk shows on the issue, more evidence of a growing Washington worry that the national frame of reference is drifting further away...
...Is it that 435 congressmen and a few delegates pay 18 percent interest and vast penalties when they bounce checks, or is it banking reform that ensures that the rest of us don’t have to...
...A common anxiety binds together Washington officials and reporters: that they will be exposed as captives of the Beltway culture they comprise...
...If an ordinary citizen wrote a bad check, he could pay a penalty of up to $25 or face interest on the overdraft,” declared Time...
...That’s a deal that makes congressional pay look like minimum wage...
...William Raspberry, one of the few sane voices on the issue, blushed in his Post column that he was “embarrassed” that he couldn’t “even figure out what the scandal is...
...Then he was fired from Financial World because of complaints from the CEOs of advertisers...
...The House has been working on a bill for two years...
...And the implications of that insulation go well beyond the House bank, to some of Americans’ most pressing issues...
...Yet a large percentage, perhaps even a majority, didn’t even know about the overdraft policy...
...The reason they didn’t pay penalties was the same reason you or I wouldn’t: They never got overdraft notices, and any statements they did get concerning their accounts were sketchy at best...
...Instead, members could in effect take salary advances by writing checks against salary that hadn’t been credited yet...
...But the biggest trouble with these symbolic issues is that they generally don’t lead to solutions to, or even a better understanding of, the larger problems they are intended to symbolize...
...Crystal noted with obvious relish that Time Warner’s outside directors increased their pay from $38,000 to press got the story...
...But I began to wonder why we don’t care that corporate people waste our money too, although as consumers rather than taxpayers...
...As for incumbency, Novak has been incumbent on the Post’s op-ed page for almost 30 years, longer than Tom Foley has been in the House...
...The point is not that particular members were right or wrong, only that the media have shown a remarkable lack of interest in how the House really works, and who was really responsible...
...Even if the ousting of unpopular incumbents in November opens up a small window for change in a legislature that needs it, there is no justification for crucifying the innocent...
...For all the pummeling of Congress over PAC money, the media have their own special-interest donors in the form of advertisers...
...Credit ratings are a similar outrage: The Federal Trade Commission sa:ys these ratings are the single biggest source of consumer complaints...
...Fair enough...
...But people rarely take a pay cut to go to the Times, The Wall Street Journal, or NBC...
...Clearly, members of Congress shouldn’t be a privileged caste, but abolishing the House payroll system won’t in itself ease their constituents’ load...
...You know, A1 Capone was put away on tax evasion, and so forth...
...it recorded kids stuck in front of TV sets for hours on end and shadow staff arriving to make a show of educational activity and adequate supervision just before parents came at the end of the day to pick up their kids...
...A fact conveniently downplayed in press accounts is that reporters also used the House payroll office, to cash personal checks...
...As a certified check-bouncer, presumably he’s known about the lax payroll procedures since he came to Congress in 1978, or sometime thereafter...
...I can’t find a niche in any American magazine that has advertising pages, because my enemies are going to be out there threatening to pull their advertising,” Crystal told The New York Times...
...But while covering up its own bad credit risks, it’s succumbed to lobbyist pressure and reshaped the bill into anti-consumer 1egislatio.n that would actually prohibit the states from doing anything to tighten weak federal standards...
...Even if individual congressmen weren’t consciously abusing the system, this argument goes, they are getting their just deserts for the institution’s collective misdoing, from the congressional pay raise to the general cowardice regarding the nation’s budgetary ills...
...The system, created long before any current members were elected, pays House members through a payroll office that operates as a check-writing cooperative...
...Free lunch Workaday reporters don’t match those princely pay levels...
...60,000 a year (plus new pension benefits)-and all this for just “a few days work a year...
...And why can’t Citibank and local branches treat us more like their favored customers instead of charging 18 percent...
...The irony is that the media have become like Reagan and Bush, running against the government they run-thus betraying how much a part of the Capitol culture they really are...
...Few editors worry about libel suits when attacking Congress...
...The congressional pay raise was a prime example...
...It’s a classic example of the cherry-picking that too often passes for reporting in the Capitol...
...Oh, come on...
...For virtually all the pay-and-perks debauchery we read about in Washington, the corporate world has more egregious examples...
...It was buried on page 23...
...During the height of the House bank frenzy, lists of congressional “perks” appeared in the Post and Newsweek...
...If Americans are peeved because members of Congress don’t share their own misery, then that’s a signal to ciddress the misery rather than simply to insist that members of Congress share it...
...Nevertheless, the lesson for survivors of the fall elections is not likely to involve getting tough on redlining and cracking down on credit card interest rates and the rest...
...Members’ pay was deposited into accounts that together formed a kind of pool from which members could write checks...
...These events were openly acknowledged to be vacations on company expense...
...When journalists proclaim that Congress is “wallowing in privilege and hypocrisy,” as John Fund of The Wall Street Journal put it, they’re also talking about themselves...
...it’s the broader issues it neglected to raise when it had it: What’s wrong, in principle, with a bank that operates like a check-writing cooperative...
Vol. 24 • July 1992 • No. 7
