Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: kodiak_bull who wrote (14827)	7/3/2002 1:39:55 AM
From: stockman_scott	Read Replies (1) \| Respond to of 23153

Fed official: Consumers OK New York bank chief tells Poles that accounting scandals, terror fears don't daunt Americans. July 2, 2002: 7:37 AM EDT WARSAW, Poland (Reuters) - The wave of accounting scandals hitting corporate America and fears of new Sept. 11-style terrorist attacks have not hit the willingness of U.S. consumers to spend, a U.S. central banker said Tuesday. The comments by New York Federal Reserve President William McDonough marked the first statement by a top U.S. monetary policy maker on the $3.8 billion accounting scandal at WorldCom Inc., the No. 2 U.S. long-distance phone company. "Consumer spending stays quite high, especially in autos and housing, and there are no data that would suggest that these accounting scandals and terrorist threats affect consumer spending. But it is clearly a risk," McDonough told reporters on a visit to Warsaw. "The risk to economic forecasts is: Could consumers become more cautious? Probably not. And could business fixed investment stay weak? Probably not. But it is a slightly greater risk," he added. The unfolding WorldCom scandal, which came after the company admitted inflating profits by misreporting spending as capital investment, has smashed confidence in U.S. stock markets. The technology-dominated Nasdaq slumped by 4 percent Monday to a five-year low. Shares in WorldCom are now virtually worthless and analysts say bankruptcy may be imminent after lenders put it in default on $4.25 billion in credit lines. But McDonough's reassuring comments suggested that the damage to the net wealth of American consumers caused by the stock market selloff would not have a significant, wider impact on growth in the world's largest economy. His comments came after data last week showed U.S. consumer sentiment suffered its biggest one-month drop in June since the Sept. 11 attacks. Warnings by Washington of fresh attacks by the Islamic militants of the Al-Qaeda network behind the suicide plane attacks on the World Trade Center in New York and the Pentagon have rarely been out of the headlines. But other figures show that retail activity remains strong in car showrooms and shopping malls across the United States, leading analysts to forecast continued recovery. McDonough said the so-call "blue-chip" forecast put together by leading private sector economists appeared reasonable. The group sees the U.S. economy growing by four percent this year, and by 3-3.5 percent in the second half, with growth slowing to 3.4 percent in 2003. --------------------------------------- btw, Kb I agree with you about advisors...of course, I grew up in a family of lawyers...=)

To: kodiak_bull who wrote (14827)	7/3/2002 1:57:24 AM
From: stockman_scott	Respond to of 23153

Washington Lawyer Helps Companies Fess Up By Jonathan Krim Washington Post Staff Writer Wednesday, July 3, 2002; Page E01 William McLucas calls himself "a pretty boring lawyer who is just trying to get through the day." Well, maybe, but the career Washington attorney has become the go-to independent investigator for companies involved in high-profile financial scandals. When Enron Corp.'s board of directors wanted its own inquiry into the energy-trading firm's byzantine partnerships that inflated profits and enriched its executives, it hired McLucas to lead the investigative team. The result was a report that shocked the nation and provided a road map for ongoing investigations. And last week, when WorldCom Inc. disclosed that it had improperly accounted for $3.9 billion in expenses, its board turned to McLucas, a partner at Wilmer, Cutler & Pickering, to head an internal inquiry that began last weekend. Companies in such straits seek a harsh medicine: independent reports that probably will offer more embarrassing disclosures but in so doing will help restore credibility and demonstrate a commitment to fixing problems and exorcising demons. That requires a lot of trust in the inquisitor. Enter McLucas, 51, who spent more than 21 years at the Securities and Exchange Commission and knows the terrain of examining financial impropriety as well as anyone. But personal qualities set McLucas apart, according to those who have worked with him. "His total integrity, charismatic personality and absolute lack of artifice of any kind make Willie one of the most effective and engaging professionals I have ever known," said Arthur Levitt Jr., who was the chairman of the SEC when McLucas ran the agency's enforcement division. "Bill was always restraining me. I tend to be more impulsive. He tends to be more measured." Indeed, it is difficult to find anyone with even an equivocal whisper about the man, a rarity in political Washington. "People are drawn to Bill; they want to be around him," said Mary L. Schapiro, a former SEC commissioner who now is vice chairwoman of the National Association of Securities Dealers. "It's very interesting to watch." McLucas approached the Enron and WorldCom jobs with his trademark deliberation. "You go into it listening, trying to get the best sense you can have about what the problems are," he said in an interview. And he helps clients recognize the importance of disclosure of the results. "That goes as much to the credibility as what it is you ultimately say," he said. Enron made its report public, and WorldCom chief executive John W. Sidgmore has promised to "make all the facts available" once the company has them. In the case of Enron, McLucas worked with members of his law firm to help produce a report written by William C. Powers Jr., dean of the University of Texas Law School, who headed the overall inquiry. The scathing report faulted senior Enron executives for either participating in or ignoring Enron-funded partnerships that made executives tens of millions of dollars and allowed the company to hide huge losses and debts. McLucas would not comment on the ongoing WorldCom investigation. The company fired its chief financial officer, Scott D. Sullivan, who the company says masterminded its scheme to improperly spread expenses over several years. Sources said the investigation will range beyond Sullivan and departed comptroller David F. Myers and will include former chief executive Bernard J. Ebbers. McLucas, who grew up in the tiny town of Lilly in western Pennsylvania and attended Penn State University and then the Temple University law school, said he worries about the state of corporate credibility in the wake of the wave of financial misdeeds, but he also worries about an overreaction in response. "The public pressure to move quickly and the political criticism concerns me," he said. "People have seen a breakdown in many of the market structures . . . that we relied on, but we need to sort this out before we decide that the system can't be trusted." McLucas added that he thinks the SEC has moved aggressively to tackle the issues and is doing as much as it can with limited resources, which he said need to be increased. © 2002 The Washington Post Company washingtonpost.com