he current crisis in American capitalism isn't just about the specific details — about tricky accounting, stock options, loans to executives, and so on. It's about the way the game has been rigged on behalf of insiders. Posted on 07/12/2002 6:28:45 AM PDT by liberallarry
he current crisis in American capitalism isn't just about the specific details — about tricky accounting, stock options, loans to executives, and so on. It's about the way the game has been rigged on behalf of insiders.
And the Bush administration is full of such insiders. That's why President Bush cannot get away with merely rhetorical opposition to executive wrongdoers. To give the most extreme example (so far), how can we take his moralizing seriously when Thomas White — whose division of Enron generated $500 million in phony profits, and who sold $12 million in stock just before the company collapsed — is still secretary of the Army?
Yet everything Mr. Bush has said and done lately shows that he doesn't get it. Asked about the Aloha Petroleum deal at his former company Harken Energy — in which big profits were recorded on a sale that was paid for by the company itself, a transaction that obviously had no meaning except as a way to inflate reported earnings — he responded, "There was an honest difference of opinion. . . . sometimes things aren't exactly black-and-white when it comes to accounting procedures."
And he still opposes both reforms that would reduce the incentives for corporate scams, such as requiring companies to count executive stock options against profits, and reforms that would make it harder to carry out such scams, such as not allowing accountants to take consulting fees from the same firms they audit.
The closest thing to a substantive proposal in Mr. Bush's tough-talking, nearly content-free speech on Tuesday was his call for extra punishment for executives convicted of fraud. But that's an empty threat. In reality, top executives rarely get charged with crimes; not a single indictment has yet been brought in the Enron affair, and even "Chainsaw Al" Dunlap, a serial book-cooker, faces only a civil suit. And they almost never get convicted. Accounting issues are technical enough to confuse many juries; expensive lawyers make the most of that confusion; and if all else fails, big-name executives have friends in high places who protect them.
In this as in so much of the corporate governance issue, the current wave of scandal is prefigured by President Bush's own history.
An aside: Some pundits have tried to dismiss questions about Mr. Bush's business career as unfair — it was long ago, and hence irrelevant. Yet many of these same pundits thought it was perfectly appropriate to spend seven years and $70 million investigating a failed land deal that was even further in Bill Clinton's past. And if they want something more recent, how about reporting on the story of Mr. Bush's extraordinarily lucrative investment in the Texas Rangers, which became so profitable because of a highly incestuous web of public policy and private deals? As in the case of Harken, no hard work is necessary; Joe Conason laid it all out in Harper's almost two years ago.
But the Harken story still has more to teach us, because the S.E.C. investigation into Mr. Bush's stock sale is a perfect illustration of why his tough talk won't scare well-connected malefactors.
Mr. Bush claims that he was "vetted" by the S.E.C. In fact, the agency's investigation was peculiarly perfunctory. It somehow decided that Mr. Bush's perfectly timed stock sale did not reflect inside information without interviewing him, or any other members of Harken's board. Maybe top officials at the S.E.C. felt they already knew enough about Mr. Bush: his father, the president, had appointed a good friend as S.E.C. chairman. And the general counsel, who would normally make decisions about legal action, had previously been George W. Bush's personal lawyer — he negotiated the purchase of the Texas Rangers. I am not making this up.
Most corporate wrongdoers won't be quite as well connected as the young Mr. Bush; but like him, they will expect, and probably receive, kid-glove treatment. In an interesting parallel, today's S.E.C., which claims to be investigating the highly questionable accounting at Halliburton that turned a loss into a reported profit, has yet to interview the C.E.O. at the time — Dick Cheney.
The bottom line is that in the last week any hopes you might have had that Mr. Bush would make a break from his past and champion desperately needed corporate reform have been dashed. Mr. Bush is not a real reformer; he just plays one on TV.
Good job, Krugman, you hairy windbag.
Krugman slams the spending of $70MM to pursue Whitewater -- after all, it was merely an S&L scam that only cost taxpayers $40MM... that is if you discount the scamming of the retirees who were actually buying property in the Whitewater development... Oh, and we should forget the tax-evasion that apparently took place with Clinton never paying for his passive partnership and then receiving various payments from the partnership. Yeah, all those messy details related to Whitewater -- and the Demos certainly wanted to get to the bottom of it by slamming the various attempts to vet the scandal.
And of course, Hillary Clinton has room to criticize W for not being forthcoming, open and honest. After all, she had perfect memory and recall of all her past Whitewater involvement -- good thing those billing records disappeared for a few years.
The Liberals are really hilarious when it comes to all this slamming of Bush, these Corporate scandals (about which the Demos/liberals have no clue about accounting, auditing, ethics, honesty) and almost everything else of import these days. JMHO.
Someone needs to inform Krugman that those firms had their desires enacted into law by the kind hand of a Sen. Christopher Dodd. Did I mention he was DNC chairman at one point?
There'll always be insiders and always some insiders who are also crooks. In good times investors are making money and regard the crooks as part of the cost of doing business. In bad times investors are losing money and call the crooks by their rightful name.
I thought the criticism of the Clintons' Whitewater deal was overblown and I think the same of criticism of Bush's business deals. These were actions by businessmen trying to make money who acted according to the opportunities available to them, played by rules not of their making.
When they become President their motivations must change. Now their job is to make sure the United States does well. By all accounts Mr. Bush is doing a much better and more serious job as President than he did as businessman. We'll see how well he handles the current problem of business ethics. Of course, people don't like it when you make money by one set of rules and prevent them from doing the same thing.
Too bad.
Oh yes you are...from other threads...
When the Securities and Exchange Commission was investigating private-citizen Bush’s sale of stock, he not only answered all their questions, but he waived attorney-client privilege so the SEC could talk to ANYONE about ANYTHING before rendering their decision.
THE DOMINANT SUBJECT at President Bush’s rare press conference Monday evening was not new corporate scandals that threaten America’s capitalist economy. It was a 12-year-old stock sale by private citizen George W. Bush. That caused a Securities and Exchange Commission (SEC) official, who long ago gave Bush a clean bill of health, to ponder the wondrous ways of Washington. That official was not, as National Public Radio suggested Tuesday morning, then Republican SEC Chairman Richard Breeden (appointed by the elder President George Bush). It was SEC enforcement chief William McLucas, now a partner in one of Washington’s most prestigious law firms — and a Democrat.
Liar, Liar, Pants on Fire....
Perhaps it's because he had to sell the stock to take the position as secretary of the Army?
Of course Krugman knows this. He lies by omission- not even very well.
You mean accounting procedures are black and white, Paul? You mean every company in the US keeps their books the same exact way? Patently untrue. Bush gets it. Krugman does as well, but he'd prefer to lie about it.
The Sunbeam debacle happened in 1998. Who was president then? How many years did that president have to toughen penalties for financial crimes? Did he?
Of course Krugman knows this. He's simply a liar.
But I thought Bush "didn't get it" because he said "sometimes things aren't exactly black-and-white when it comes to accounting procedures."
So Paul, which is it. Are accounting procedures black and white or are they too technical for the layman? You can't have it both ways.
So why didn't you publicize this wrongdoing before the election, Paul? You had your soapbox then, right? Why wait till after the election, after war was waged on us?
The same could be said of Mr. Krugman and real economists. Except that Dubya's a far more convincing act. Is the domain name krugmanwatch taken?
"In the future, may I suggest that you could increase your credibility by not automatically regurgitating the lies spewed forth by the Democrats for purely partisan political purposes...don't let your hatred of all things Republican keep you from doing your own investigative reporting."
Of course, now even some Keyensians are embarrassed by him.
I wonder if Krugman thinks perjury is black-or-white, yes-or-no... Lying to a grand jury? Lying to the American people (violating one's oath of office)? Black-or-white?
Situational ethics is the hallmark of the Clinton era -- it will take years to cleanse the country of its effects.
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