Congressional DNA Litters Corp. Crime Scenes
By Stephen Pizzo
June 21: Last evening veteran Washington journalist, Hedrick Smith, hosted a Frontline documentary entitled, "Bigger Than Enron." The hour-long program examined the recent wave of corporate corruption and exposed its causes.
As Smith cleared away all the dust being thrown up by a parade of lectern thumping "outraged" politicians, what was left was a crime scene littered with incriminating chunks of congressional DNA.
Brushed aside were boilerplate suggestions that the core of the problem was a "shocking" rise in corporate greed - as though greed were not an integral element of human nature. Greed is, has, and will always manifest itself when allowed to satisfy its appetites if and when it can do so at minimal risk. Take a hundred law-abiding folks, put them in a room where they have access to large sums of money without oversight or controls, on the "honor system." In short order you will create a number of crooks. That is not a cynic's view. It's simply common sense.
What the Frontline piece did last night was to finger those who created the conditions that in turn created the Ken Lays of the 1990s. The culprits turned out to be Members of Congress who, as far back as 1993, followed the bidding of industry lobbyists and weakened regulations, cut the SEC's budget, and opposed strong new laws regulating corporate accounting.
Smith was careful - and right - to balance his report. Democratic Senator Chris Dodd of Connecticut was slammed for shamelessly pushing accounting industry-inspired litigation reform. President Clinton vetoed the 1995 measure, saying it would shield corporate crooks from shareholders. Dodd helped override Clinton's veto. The resulting law is now a major roadblock for bilked shareholders trying to sue for relief. (See our special PSLRA report in "Featured Content" on this site.)
House member Billy Tauzin, R-LA was also exposed as a hypocrite. Most recently Tauzin has been the loudest mouth on the Hill, demanding to know why accounting firms like Andersen went over to the Dark Side. But back in 1994 and 1995 it was Tauzin who, just as loudly, savaged then SEC chairman Arthur Levitt. Levitt had suggested a new SEC rule that would have prohibited accounting firms from providing lucrative consulting services to the same companies they audit. Tauzin, a major recipient of accounting industry contributions, threatened to cut Levitt's budget if he proceeded with the rule. Among those who pressured Levitt to drop the idea was Enron's Ken Lay who said his company's audit/consulting relationship with Arthur Andersen was essential to Enron's well being - as we now learn was all too true.
Smith also took former Republican House Speaker Newt Gingrich and Senate Governmental Affairs chair Joseph Lieberman for an unflattering stroll down memory lane.
Contribution Induced Memory Loss
Now that Congress is in the forensic phase of the latest financial/ethical/political meltdown, what are the lessons they should have relearned? I say relearn because, we've been there, done that, in the 70's - remember Vesco; the 80's- $500 billion in S&L losses, Milken, Boesky; and now the 90's - the dot-com meltdown, Enron, Andersen, ad nauseam. Washington, it would appear, suffers from severe contribution-induced memory loss.
So, let's keep it simple. Here is what all Members of Congress need to remember the next time lobbyists submit their regulatory wish-lists written in the margins of crisp $1000 bills:
Rule 1: Over-regulation always scares away investment and smothers growth.
Rule 2: Under-regulation always unleashes greed and corruption that scare away investment and smothers growth.
Capitalism is not, as some conservatives would have us believe, a naturally self-regulating financial life form. Instead, capitalism is more like a very bright and creative teenager; capable of amazing things. It bristles at limits, but thrives when limits are wisely imposed for its own good.
thedailyenron.com |
