Campaign Finance After Enron
Washington Post Editorial
Wednesday, January 23, 2002; Page A16
AS CONGRESS resumes business today, it has a chance to act immediately on one aspect of the Enron scandal. That aspect is campaign finance. The existing system of soft-money donations allowed Enron to buy access to the administration and Congress. Although it is not clear yet whether this access corrupted the policy of the Bush administration, it appears likely that it did corrupt Congress in the late 1990s, contributing to a misguided decision not to regulate the financial instruments that triggered Enron's bankruptcy. Moreover, the soft-money system has allowed Enron's auditor and the other big accounting firms to sway Congress on the issue of audit regulation, contributing to the lax standards that made the Enron scandal possible. Now that thousands of Enron employees have lost their jobs and in some cases their retirement savings, there is no excuse for further delay in banning soft money.
It is true that the Bush administration refused to help Enron stave off bankruptcy. But those who suggest this exonerates the existing campaign finance system have a steep hill to climb. Enron and its officers would not have donated $1.7 million in the 2000 election cycle -- 70 percent of which came in the form of soft money -- if they thought they would get nothing in exchange. Even the suspicion that the money bought something is enough to corrode public trust in the political system. The fact that some members of Congress are now returning money received from Enron underlines the damage that soft money can do to politicans' standing.
But the larger point is that the Bush administration's indifference to Enron's final pleas may have been the exception. Enron's money may well have played a role in persuading the administration, in the form of no less a person than Vice President Dick Cheney, to intervene on its behalf with an Indian leader. It may have made a difference to the White House's energy policy. And it almost certainly bought sympathy in Congress. In 1998 the head of the Commodity Futures Trading Commission, the federal agency that regulates derivatives, suggested that there should be oversight for the kinds of "over-the-counter" instruments that Enron trades. But Congress buried the proposal, apparently because Enron and other industry participants did not want to be regulated.
Then there are the Big Five auditing companies, all of which featured among the top 20 contributors to the Bush campaign, and all of which have showered money on Congress. On three occasions in the 1990s Arthur Levitt, the chairman of the Securities and Exchange Commission, tried to tighten regulation of auditors. Each time the industry persuaded Congress to squelch his ideas. In one fight, in which Mr. Levitt tried to prevent auditors from limiting their legal liability, the industry even persuaded Congress to overturn the president's veto. If the auditors' soft-dollar contributions had been limited, and if their sway over Congress had been diluted, it is conceivable that the rules governing auditors would now be more robust.
The Enron scandal raises other issues that will take months to resolve. But the work on campaign finance is fairly advanced already. The Senate has passed a good bill, and reformers are organizing a petition to force a vote in the House over the objections of the Republican leadership. It would be extraordinary, in the face of Enron, if Congress failed to act now.
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