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Malefactors of Great Wealth
July 11, 2002
By Jeff Ritchie

Several 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 Exchange Commission.

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 dismissed.

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

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