of Great Wealth
July 11, 2002
By Jeff Ritchie
years back I developed a theory that has proven itself remarkably
accurate. When dealing the legislation concocted by congressional
Republicans, any bill that includes the word "reform" in the
title will invariably wind up screwing the average American
like a $20-per-night Yokahoma hooker.
Remember the Telecommunications Reform Act that promised
us rock-bottom cable rates? How about the reforms in the banking
industry that will allow credit card companies to pursue debtors
even after they declare bankruptcy? And in a previous political
generation, there was reform of the savings and loan industry
that was, well, less than stunningly successful.
Which brings us to the Private Securities Litigation Reform
Act, passed over Bill Clinton’s veto on December 20, 1995.
This bit of Newt Gingrich-inspired reform made it more difficult
for disgruntled investors to sue corporate chieftains for
selling bogus securities. In his veto message, President Clinton
warned that the act would erode the accountability of corporate
finances and provide a layer of protection for outlaw executives
who look to defraud their investors.
Republicans and their allies in the corporate media scoffed
at the notion that corporations would ever do such a thing.
After all, the book Jesus CEO had been tearing up the
New York Times bestseller list all that year, and if you can’t
trust your investments with Jesus Christ, who can you trust?
Everybody was getting rich on Wall Street, and Bill Clinton’s
warning of a potential catastrophe was dismissed as liberal
hand-wringing and, worse yet, more proof that Democrats were
secretly opposed to business and prosperity.
Now that the magnitude of corporate fraud can be measured
in the hundred of billions of dollars, one would like to think
that Republican congressional leaders would swallow their
pride and admit that allowing corporations to operate on the
honor system was a singularly bad idea. Instead, they support
the unlikely succession of Harvey Pitt to the Securities and
Pitt is a former executive with Arthur Anderson, the rogue
accounting firm that seems to have its fingerprints all over
every case of corporate fraud currently circulating in the
business section of your daily newspaper. Pitt’s former associations
alone should be grounds to have him removed from his position
as watchdog over Corporate America. But it gets worse.
Pitt has openly endorsed the idea that corporate accounting
practices should be even more deregulated than they are today,
which is something like arguing that the best cure for a headache
is to have a large anvil dropped on your head. Pitt’s approach
mirrors the environmental policies of George W. Bush while
he was governor of Texas, which essentially allowed Texas
industries to self-regulate themselves into a toxic quagmire.
All of this seems to be creating a tectonic shift in the
political world. Because healthy businesses create high-paying
jobs with decent benefits, the Democratic Party can now legitimately
assume the role as the party of business. The Democratic Party
can, through block grants, increased funding for basic research,
and empowerment zones, create a positive business climate
that will create good jobs. The Democratic Party should, through
legislation and regulation, hold accountable the malefactors
of great wealth who steal from their employees and investors.
The Republicans have allied themselves with business people
who create empty corporations and swindle unwitting investors,
including state-funded retirement and pension plans. Their
corporate supporters are not content with pillaging merely
the Arctic National Wildlife Refuge – now they want your 401(k)
account, as well. My advice would be to hide your women and
children while there’s still time.
President Bush, sniffing the direction of the political winds,
has promised to crack down on corporate law-breakers and demanded
to that congress double the sentence for persons convicted
of fraud. He could really crack down by tripling the sentence
or even demanding the death penalty. All of this focus on
the penalties after the fact ignores the reality that few
of these robber barons are even hauled into court and even
fewer are ever convicted.
Offering a preview of the testimony from a parade of accused
corporate felons, the President defended his own shady stock
transactions of a decade ago by saying they were the result
of confusing accounting practices. "Sometimes things are exactly
black and white when it comes to accounting procedures," the
MBA President claimed in last week’s press conference. Case
Without reasonable regulation of the markets (something Mr.
Bush disdains), there will simply be no end to the stock-rigging
scandals and the continued enrichment of corporate insiders.
Given the fact that insider trading is, itself, largely responsible
for the President’s personal fortune, it seems highly unlikely
that this administration plans to do anything substantive.
We are likely to get a set of "reforms" that are more unpalatable
than the situation we are in already.
And for that, the Democrats should punish the Republicans
generously in November.
Jeff Ritchie is a writer and Democratic Party activitist living
in Cincinnati, OH