Endless Knots

Transparency at Treasury - The case of the missing org chart

Following yesterday's post on how the Geithner bailout plan did not provide the transparency required to fill the enormous trust gap, I checked out the Treasury page on the "Emergency Economic Stabilization Act" (EESA) which is where "details" about the TARP program hang out. First thing to notice is that it looks broken, i.e., the entire left hand column is blank. Strange. It's been this way since this section of the Treasury site was launched in October, 2008. Otherwise, since the new administration has come in, nothing has changed. A few press releases have been added. This stands in stark contrast to the White House site, which is, shall we say, nothing like what was there before January 20.

Then I looked for the Treasury org chart. Not to be found. A review of the site map confirmed that none was listed.

Curious, I checked out the other departments. Most have the Bush-administration org charts still posted. Notably, Steven Chu, the Nobelist Secretary of Energy, has already posted an updated DOE chart. And, Arne Duncan's Dept of Education site has the most interesting interactive chart, which, because of its design, is naturallly up to date. The Treasury Department is the only agency that has no org chart at all. Curious.

When I was assembling our OrgScope map of the US Gov, Treasury's org chart was the first one I keyed in, necessary because I was mapping the network of consultants, contracts, and bailout recipients associated with EESA (which you can see in our Rescue Map). I eventually collected and keyed in all the departmental org charts, posting them together here. As a good archivist, I had the url to the (old) Treasury map here. You can click to see for yourself where that takes you now: "We're sorry...file cannot be found..."

Surely an oversight, so as a public service we offer a link from our site to what is in all likelihood exactly the same Treasury org chart today. Moreover, we have added the organizational structure of EESA to the Treasury chart in our US Gov map. (Treasury is at 11 o'clock, then go to the Deputy, then Office of Domestic Finance, from which hangs the Office of Financial Stability.)

Treasury needs to set an example of transparency itself. Remarkably, they have become less transparent than their Bush administration predecessors. Unintentionally, I'm sure. I hope.

-- Jeff Stamps

Bailout plan fails to instill trust

Where is the new thinking?

With all due respect, I (Jeff speaking) don't think Tim Geithner gets it. Nor, apparently does the market think he gets it, as the Dow began to tank (losing almost 400 points) as soon as the new Treasury Secretary started outlining his plan for economic recovery today. 

According to Stephen Labaton and Edmund Andrews's page-one piece in today's NY Times ("Geithner Said to Have Prevailed on the Bailout"), Geithner opposed placing tighter curbs on executive pay, didn't endorse directing how the banks would use the bailout money, and refused to challenge the retention of current management -- the brilliant folks who brought us this mess.

The Times article also said Geithner "expressed concern that too many government controls would discourage private investors from participating." And, the Times piece indicates that not everyone in the President's office agreed with Geithner's approach, specifically David Axelrod, who "did not deny that there were differences of opinion as the policy was being crafted or that he had taken a harder line on issues such as executive pay restrictions, as other participants to the discussions recalled."

Obviously, we are not privy to conversations in the White House but, along with millions of other Americans, we too experience the effect of every decision made regarding the economy--and thus care deeply about the choices Geithner is making.

In announcing the plan today, Geithner said he would restore "lost faith" in the bailout. Instead, he apparently did the opposite. His plan unsettled precisely the group he didn't want to offend, private investors. No thank you, said the market.

In a word, what Geithner doesn't get is trust.

We have been following the TARP (Troubled Assets Recovery Program) saga on our site and here on the blog since the program began in October, 2008. Likewise, we've created an OrgScope overlay of the Act I TARP and related programs on our map of the US Government. From the beginning, we said it was all about "transparency for trust," which we titled our online essay about this subject. We have written numerous posts on the subject.

Trust is not a nice to have. It's a need to have. The Obama plan needs to restore trust for private investors, for the American public, and for a Congress that will be asked to come up with billions and probably trillions more before this is over.

And the only route to trust is transparency. Sunlight. Geithner's plan thus far offers little in this regard.

-- Jeff Stamps

Transparency and the Office of Financial Stability? - Update 6, so to speak

And all we wanted was a little transparency with our trillions to the rescue. As reported a few weeks back, Bloomberg News filed suit under the Freedom of Information Act to force the Fed to reveal where the bailout money really is going. Bad news. Mark Pittman reports in Bloomberg today ("Fed Refuses to Disclose Recipients of $2 Trillion - Update2") that the Fed said, simply, "no:"

The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.

I really don't know what to say. How could this information be kept secret? We've continued to do our best to map the rescue network but frankly no one can.

An imaginary center for "Federal Economic Rescue Network"

In the interest of making sense of the bailout, we continue to refine the maps. It's not easy to follow the money, which is not just our opinion. See for example, what the person heading the oversight panel--set up on October 3, we might point out that is just starting up-- that Congress appointed has to say.

According to Diana Henriques's, "Bailout Monitor Sees Lack of a Coherent Plan," in the Dec 1, NY Times, "The head of a new Congressional panel set up to monitor the gigantic federal bailout says the government still does not seem to have a coherent strategy for easing the financial crisis, despite the billions it has already spent in that effort."

Elizabeth Warren, chair of the oversight panel, also observes that there is no point of coordination for the government's many rescue plans. NetAge (that's us) to the rescue! To fill the gap, we have added some links to our OrgScope Economic Rescue Map, creating an "imaginary point of coordination" called <ECONOMIC RESCUE NETWORK>, which you'll see on the map in <brackets>. For the sake of logic, we've placed this node in the Executive Branch, between <FEDERAL AGENCIES> and the Vice-President (click image below to enlarge and see what we're talking about).

We've organized the rescue network into three (huge) groups:

1. The Emergency Economic Stabilization Act (EESA, i.e., the $700 billion) and its associated structure of Treasury employees and contractors (which we've tracked through Treasury press releases) called the Office of Financial Stability (OFS);
2. The collection of major funding efforts under <RESCUE FUNDING>, including OFS, the Federal Reserve, FDIC, FHFA, and other spending ; and
3. A node connecting all the <KEY RESCUE AGENTS> themselves.

You can track data for the $8.5 trillion in commitments (of which just over $3 trillion has actually been spent) on our site at "Sources for Rescue Costs - Take 2 - Early December 2008." Again, thanks to Jay, we have another tip from Barry L. Ritholtz, posted Dec 2 08, "Calculating the Total Bailout Costs" from his blog The Big Picture.

We display this new OrgScope map in its "tree" mode, meaning that "nodes" with multiple connections show up multiple times, i.e., everywhere they're connected. Thus, someone with a matrix report to a second boss, would show up on the org charts of both the primary and the dotted-line bosses. Hence, the EESA relationships also show up when you drill down into the Treasury Department, while the Federal Reserve funding areas also hang under the Fed in the collection of <FEDERAL AGENCIES>. To see what lies beneath a particular node, meaning what comprises its sub-network,  click on the "+" mark in the lower-right part of the node's box. Click on the "-" sign to close it up.

How do we get to $8 trillion in "rescue" spending?

Back to the bailout (in case you're hungry for more of those posts): It takes a lot of past spending to add up to the still-running-north of $8 trillion in US government economic rescue costs. Many people are struggling to make comparisons, which keep need continuous updating as the costs rise. One follower of the economic crisis is Barry L. Ritholtz on The Big Picture. The chart below is from "More Bailout Comparisons," his Dec 3 post, for which we thank our son-in-law Jay Albany, who spotted it first. In the graphic below, take a look at the big red circle, which "only:" represents $4.6 trillion (click on it to enlarge).

By way of comparison, you can get to a comparable amount (ok, just under $4 trillion) in inflation-adjusted dollars by adding up all of the following:

• Marshall Plan,
• Louisiana Purchase,
• Race to the Moon,
• S&L Crisis,
• Korean War,
• The New Deal,
• Invasion of Iraq,
• Vietnam War, and all
• NASA spending.

Then to get close to the $8 trillion figure, Bloomburg adds in the adjusted cost for:

• WWII, at $3.6 trillion, 

and brings us to $7.4 trillion, which you can see under the graphic entitled "Inconceivable" on our site. Whew. We're going out for a walk. It's free.

Transparency and the new administration

Beginning last week and continuing over the next few months, we all have ringside seats as something quite remarkable happens: the organization with the most power on our precious planet is populating its org chart.

Thanks to our President-elect, names are popping into boxes, and, as we've been doing with the work of the Treasury department, we're following along and filling in the ever-expanding picture of the new US administration as it takes shape via OrgScope.

At risk of having to change a name here and there later, we're including everyone who's rumored to be involved, once that rumor is repeated repeatedly, as in the case of our probable new Secretary of State. You'll note that where such names are yet to be formally announced, we've marked them "unofficial."

So far, we've filled out three departments down to at least five levels--Treasury, State, and Defense, which is particularly interesting and deeply complicated (i.e. all of the branches of the military hang off of it). For Treasury and Defense, we've gone even deeper.

To understand what I'm saying, click here to "Run US Gov Map," wait a sec as the OrgScope map loads, then use your mouse to zoom around. Pull a box into the middle of the screen and see what's beneath it expand. To change the view, go to the top of the screen and, from the menu, select whether you want to see it by Organization, Position (for job title), or Person, in which case you'll see some (soon-to-be) familiar faces.

For example, let's start with the Executive Branch, represented by the picture of the White House. Choose Position and up comes President-Elect of the US; choose Person, and who do we see?

Please note also that if you click over to the Treasury Department, you'll once again find yourself swimming in the detail of the economic mess, as previously reported here in Update 4, 3, 2, 1...liftoff!

Why are we doing this? Because it's really important to understand the government - and we have so few tools for being able to do so. Eighth grade social studies/civics class is ancient history for most of us; for those abroad whose lives are so affected by the US government, ours is really arcane. And, classic org charts - meaning wire-and-box charts typically represented department by department - are static, disconnected, and lacking in their ability to represent the big picture.

Which brings me to this point: The terrible situation we're in may have a bright spot. For the first time ever, we are learning how the economy really works. Of course, we wouldn't have chosen to do it this way. Likewise, because we have a new administration that is rolling out very quickly, we have the chance to understand how *it* really works. This is our contribution to that understanding.

Transparency and the you-name-it crisis - Update 4

Or perhaps it should be transparency.

We're keeping up as best we can with the expenditures on our behalf but, frankly, it's becoming tougher and tougher to follow the money. Soldiering on, we've added more info to the OrgScope maps of the government's spending since Congress passed the $700 billion package. And we're tracking the research of others, including such excellent articles as Ross Kerber and Rob Weisman's November 13, '08, Boston Globe piece, "Bailout retooled to boost lending."

To follow, you need a very sharp pencil, as it turns out that considerably more than $700 billion has flowed into "the markets," approximately three times that amount. We've taken the information from the chart accompanying the article and combined it with information from the Treasury Department to give a composite view of about $2.3 trillion.

Three pots of money have gone out the door--or are/were supposed to: the original $700B authorized by Congress for use by the Treasury, of which almost half has been allocated and is mostly spent/invested; another $1.5 trillion in lending out of the Federal Reserve; and a further $693 billion, which the Kerber-Weisman piece lumps under "other spending."

When Fed Chairman Ben Bernanke was questioned by the House Financial Services Committee last week (Treasury Sec Henry Paulsen had his turn on the hot seat too) about the failure to disclose the recipients of so much Fed lending, he argued that the recipients only agreed to take the money if they could do so without revealing who they were. Bloomberg News asked for "details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure," according to "Fed Defies Transparency Aim in Refusal to Disclose," a Nov 10, 2008, article by Mark Pittman, Bob Ivry and Alison Fitzgerald.

We've added the additional players and spending amounts to our OrgScope map - scroll to right, then drill down into Treasury for the $700B and into Federal Agencies, then the Federal Reserve for the $1.5 trillion. We've tagged each of the loans and equity investments by recipient (and where not available, by group, as per the Globe lumpings, i.e. Securities Dealers = $80 billion; Money Markets = $100 billion; Commercial Paper = $230 billion), hanging each one off the agency that was the conduit for the money. We've added two more contract awards by the Office of Financial Stability as well, each for about $5.5 million, for legal advice services around the investments (Squires, Sanders & Demps contract here and Hughes, Hubbard, & Reed contract here).

OK. So none of that is what we hoped for with the bailout. Not much transparency, little visible results. But change is coming, and we are also tracing the government-elect as it forms. So click on the White House and then follow the new appointments there. We'll have a new post on mapping the transition shortly. (Click on the image to go right to the map, then zoom around the government. Enjoy.)

"Transparency for Trust" (Part 2)

Transparency for Trust: Mapping the Government and Our Money - Part 2
By Jeffrey Stamps and Jessica Lipnack


“Seeing is Believing”

We can map the inherently public organizational structure of the OFS federal-contractor partnership that makes the deals and doles out the funds. Imagine this organizational topography visualized and navigated as you can with Google Earth (for example, see our dynamic map of the US Government in transition with an illustrative OFS overlay).

What does the organizational network map do for us? Two things: more accountability and more minds.

First, By making the whole network transparent as the OFS grows and makes deals, oversight and accountability become simple by-products of its actions. Those involved will be much more likely to act responsibly if the results of their work are visible to all, not just to their supervisors.

Second, we naturally engage many more minds with a shared view of the whole as the mixed agency-consultant enterprise develops and responds to the onrush of events. Never has it been more true that, in the face of such monumental complexity, the whole is smarter than any of us individually.

Using common tools for displaying networks, it’s relatively easy to map the $700 billion network as it grows. Each new job will report (i.e., link) to another position that eventually reports to a lead-contractor post that reports to an official assignment that reports to Mr. Kashkari. People come with the jobs. Their concrete work will result in contracts with specific clients, deals with precise dollar values.

We can link the agreements to the actual organizational units, teams, and positions that transacted them. Now we have a single network representing the whole OFS organization, its clients, and its deals, all appropriately sized by their slices of our at-risk taxpayer money. We then can roll these slices up through the executive ranks to Mr. Kashkari’s level, where we can see the running total of taxpayer commitment.

Of course, we can apply this idea of mapping how the government spends our economic rescue money more widely—for example, to all the other instant organizations managing billions (they seem to be a-borning daily). Why not tie all the taxpayer-funded pieces of the whole thing together? Where does the AIG money sit? Who transacted and who holds the Fannie and Freddie billions? Who handles the proposed $25 billion for the auto industry?

As a practical matter, transparency requires both detail and context. A "Google for Government" OFSpending.gov database could provide searchable detail on all the quasi-public deals—including who got them and who transacted them. The network map hooks the organizations, people, and contracts together, connecting the dots, giving context. By drawing the public map from public information, everyone shares a common mental model of the whole rescue network, the basis for more cross-boundary collaboration and smarter decisions.

In order for the next president and his advisors to get a grip on the whole Federal Government, just reverse the process and follow the money we already spend. Again, start with the OMB database to reverse-engineer the underlying organizational network along the lines of the OFS mapping idea described here. Each government award/grant/deal has been generated by some front-line team with a supervisor who reports to someone who reports to someone in a chain up to the Secretary of Something, an agency like HHS, Homeland Security, or Defense. Track the money up the reporting chains of jobs and you map much of the federal bureaucracy from the bottom up. The result is a single, navigable network with links to each recipient who, in turn, controls a slice of our precious annual trillions.

And, while we’re at it, why not map the rest of government? The OMB, by virtue of its mandate, has the budgets and headcount for each agency and sub-agency down to the level of every job, sized by its slice of the federal budget as well as its spending in contracts and grants.

Sounds like a big job, constructing this open government network map, but all the information is just sitting there in federal financial systems from OMB to the many human resource and information technology systems that run the government payroll and cut the checks.

We just need to connect the dots and all becomes clear, a visible foundation for rebuilding trust—priority one for enabling all the hard stuff to come.

 
--Jeffrey Stamps, PhD, and Jessica Lipnack, are management consultants and authors of six books, including The Age of the Network and Virtual Teams.

"Transparency for Trust" on NetAge site (Part 1)

We're happy to announce the opening of "Transparency for Trust," a new section of the NetAge website. Here, you'll find the org chart of the new US administration as  President-elect Obama fills those positions...

...and our continued tracking of the rather dramatic developments in the economy.

The map is important. It allows a level of transparency unfamiliar to most of us. Who walks around with an org chart of the government in their head? Not me. And given that the government is now literally giving out our money in ways they never have before, it's mandatory that we at least be able to "see" it.

Today and tomorrow, we're posting (in two parts) the essay we've written about "Transparency for Trust," critical ingredients, we believe, to rebuilding our government and our economy. We welcome feedback of all sorts

---------------------------------------------------------

Transparency for Trust: Mapping the Government and Our Money: Part 1
By Jeffrey Stamps and Jessica Lipnack

What do Barack Obama and Neel Kashkari have in common? One well known, the other not so much, but both are young men shaping this moment of transforming change. Both need organizational transparency to be successful, a way to see the new government taking shape and its now-burgeoning role in the economy.

On Monday, October 6, the US government, under threat of imminent global financial meltdown, gave birth to a new agency and handed it a budget equal to twice the expense to date of the Iraq War.

Unprecedented in US—and perhaps world—history, the Office of Financial Stability has few, if any, successful organizational models to follow. And, the 451-page bill authorizing its creation offers zero guidance in regard to its structure.

Common sense suggests that the OFS, as it already is known, is likely to yield an unwieldy bureaucratic edifice, a clumsy construct of the same Industrial-Era thinking that produced the debacle in the first place.

Neel Kashkari, the former Goldman Sachs executive appointed to head the new agency set out in the “Emergency Economic Stabilization Act of 2008,” would be well advised to bring transparency not only to his financial decisions but to his organizational ones as well.
On Tuesday, November 4, the American people selected Barack Obama as their next President. President-Elect Obama is already a fan of transparency and made it a staple of his campaign narrative. His early and deep interest is indicated by his co-authorship of the “Google for Government” law.

Known to some, but completely unknown to most, the bipartisan Coburn-Obama Bill directed the Office of Management and Budget (OMB) to create a searchable database of almost $3 trillion (in 2007 dollars) in federal grants. Officially the “Federal Funding Accountability and Transparency Act of 2006,” it was the first law Barack Obama introduced when he came to the Senate. The legislation called for tracking contracts, earmarks, direct payments, and loans by January 1, 2008. OMB made its deadline (see www.USAspending.gov for the result of this useful piece of 21st-century legislation).

Why is transparency so important? In a word, trust. “Trust, but verify,” said Ronald Reagan. Only trust with openness and verification will allow widespread confidence to develop, which is the key to market recovery. The word “credit,” after all, comes from the Latin credere, “to believe in or trust.”

Trust is also the basic coin of the political realm. Trust in and of the People grows social capital within the body politic. Today, however, trust will only come through transparency. It is key to rebuilding confidence in government, especially as it dramatically changes to meet the accelerating challenges of our time.

Given the urgency of cleaning up so many messes and restoring a modicum of faith in government, the new administration should make mapping newly-vacant positions from the top down an initial priority. A relatively small network of a few thousand political appointees soon will move into these key positions, hubs in the vast bureaucratic networks they will lead. Real organizational transparency can begin here.

But this is past and future government organization and visualization. Right now, new structures and cross-cutting relationships of the economic rescue efforts are being formed and vast sums committed.

On Monday, October 13, with markets surging to record levels, Kashkari announced the outline of the new structure, and several key appointments. However, much of OFS’s work is about to be outsourced. On the very day that OFS came to life, the Treasury Department announced it would hire a single company to act as the “financial agent” to set up the whole system.

We are poised to fail before we start. With minimal oversight and jargon-ridden reports guaranteed to lag, mistakes and problems with the warp-speed implementation of the Troubled Asset Relief Program (TARP) will accumulate, likely causing more harm than good. For starters, the Financial Stability Oversight Board is five levels away from the OFS organization in Treasury.

Trust will develop with real transparency that gives everyone a shared picture of what’s going on as the program progresses, not after the fact. Who runs it? Who works for whom? Who has control of which aspect of the project? From the outset, we can chart the $700 billion territory as it emerges.

See tomorrow for Part II...

Transparency and the financial crisis - Update 3

Remember the financial crisis, the $700B bailout, and Henry Paulson? Guess what? They're all still he-eere.

Despite the many smiling faces wherever one goes these days (for example, I went out to dinner last night, said about four syllables to my companion, and the people at the next table were all over us with post-election glee), we continue our ongoing series about the economic debacle. It doth continueth.

Latest additions to our updated OrgScope map include the government purchasing up to $250B of preferred stock in certain banks, which puts money in their coffers that they, in turn, are supposed to move back into the lending market.

The first eight banks to take advantage of the program, scooping up half the $250B, are: Bank of America, JP Morgan, Citigroup, and Well Fargo, each receiving $25B; Goldman Sachs and Morgan Stanley, each receiving $10B; Bank of New York Mellon ($3B); and State Street ($2B).  According to "Devil Is in Bailout's Details," an informative article by Deborah Solomon and David Enrich in the Oct 15, 2008, Wall Street Journal, "the remainder will be available to small and medium-size institutions that apply for an investment:"

The sweeping steps create a thicket of issues, most pressingly whether the banks will step up lending. The government is making clear it expects banks to lend out the funds it gets from Uncle Sam. Further exercising its clout, Treasury also extracted a promise that the financial firms would help struggling homeowners, continue lending and would sign up for loan guarantees offered by the Federal Deposit Insurance Corp.

"What we're doing is making clear to the banks how important it is to deploy the capital," Treasury Secretary Henry Paulson said in an interview.