Investors Disgusted By Corporate Malfeasance

GOPUSA ^ | July 15, 2002 | Carol Devine-Molin

[Gopblond]

To use a trite, but thoroughly apropos phrase, "fear and loathing" abound in this nation, pursuant to financial markets that have careened to new lows not seen since 1997. The plummeting Dow Jones, closing at 8813 on July 10th, (and continuing its descent in subsequent days) is clearly predicated upon lack of confidence in our financial institutions, with a growing list of notable corporations already implicated including Enron, Global Crossings, Tyco, WorldCom, Halliburton, and Xerox, among others. Qwest Communications International is now the latest company under criminal investigation for having been linked to fraudulent accounting schemes and irregularities that inflated corporate revenues.

Some financial analysts are estimating that it may take as long as a year for "investor confidence" to significantly improve after a series of disappointments and uncertainties triggered by corporations that unconscionably "cooked the books". CEO's, CFO's and other company honchos, working in tandem with auditing firms, are at the crux of the financial malfeasance. Sadly, defrauded shareholders have suffered profound losses, in stark contrast to corporate bigwigs that have benefitted from insider trading as part of "pump and dump" manipulations, selling off their stocks at tremendous profits and leaving the average shareholders with little. Pension funds have especially suffered throughout the nation, although some parties are now fighting back with lawsuits.

In an effort to stem the tide of growing scandal and reinvigorate the markets, President Bush gave a Wall Street address on July 9th, which outlined a stringent crackdown on these corporate thieves. And the President underscored, as he has done on prior occasions, that capitalism is dependent upon ethical players. He stated, "All investment is an act of faith, and faith is earned by integrity. In the long run, there is no capitalism without conscience, there is no wealth without character". Clearly, the public wants to see elitist heads roll due to unscrupulous behaviors, and the deleterious effects that white-collar criminals have had on both the financial markets and the average investor.

Essentially, the President urged that these Wall Street scoundrels be prosecuted and imprisoned, with the creation of new penalties that would greatly enhance oversight and accountability of corporations and auditing firms. On July 10th, the US Senate approved Bush's proposals for dealing with securities violations, including the doubling of prison sentences for mail and wire fraud, prison terms of 5-10 years for CEO's and CFO's that certify false financial reports, federal court orders freezing huge payments to executives, extending the time frame in which victims can bring civil action, and banning these white-collar perpetrators from attaining subsequent positions as corporate officers and directors.

Of course, the Democrats view this current tumult as the perfect opportunity to make political hay, squarely blaming the GOP for the current string of financial scandals. Senate Majority Leader Tom Daschle, House Minority Leader Richard Gephardt, Democratic National Committee Chairman Terry McAuliffe, Democratic Strategist James Carville and other party members were in full force, out and about the media, diligently casting aspersions upon President Bush and the Securities and Exchange Commission under his auspices. And the big hypocrite Terry McAuliffe should be particularly ashamed of himself, given that he parlayed about one hundred thousand dollars into millions via an insider trading deal at Global Crossings. The Liberal media refuses to cover this story adequately. Moreover, these Leftist partisans are ignoring the salient fact that the vast majority of the corporate criminality in question occurred during the 1990's, when their esteemed leader, Bill Clinton, was in office. It was Clinton who set the permissive and unsavory tone that enabled these excesses to flourish within the financial community.

And the ugly specter of double-standards and hypocrisy reign supreme with Senator Tom Daschle, as well. He is demanding that President Bush release all information pursuant to trumped-up "insider trading" allegations from 1990 that were thoroughly investigated by the SEC, and dismissed years ago. Interestingly, Daschle refuses to release his own tax returns, despite genuine concerns that his wife's successful lobbying career represents a considerable "conflict of interest" for him. Does the senator not directly benefit from monies generated by his wife, who admittedly lobbies House members? Daschle undoubtedly wields valuable influence with Democratic members of the House Of Representatives, just by virtue of his prestigious position as Senate Majority Leader that is sure to hold sway with other politicos of his same party.

And there is no denying that the Republicans have notable difficulties of their own related to today's thorny financial circumstances. The GOP is indeed vulnerable to Democratic attacks since the Republicans are closely tied with "Big Business" in the minds of voters, as pointed out by political consultant Dick Morris and others. (Public perceptions notwithstanding, in truth both parties are about equally dependent upon campaign contributions from major corporations). The fact that Vice President Dick Cheney, former CEO of Halliburton, is being sued by Judicial Watch on behalf of the corporation's shareholders for alleged "fraudulent accounting practices" is of vital concern. Charges will have to be carefully vetted by oversight authorities to determine whether they have any merit.

Beyond the partisan blame-game, this nation has to concentrate on ameliorating the greater systemic problem in this nation, which is "loss of confidence" in key institutions, both public and private, including the financial community, the FBI and the Catholic Church among them. And what is the basis of this lack of trust? Plain and simple, a moral crisis prevails in this nation. It does not bode well that 75% of college seniors, as per a recent Zogby poll, report that "professors teach there is no such thing as right and wrong in the literal sense" (Bill O'Reilly's 7/11/02 column, "Reaching Critical Mass"). We can't have our universities teaching our kids this twaddle. Our ethical problems and decadence as a culture are manifesting in so many ways (significant number of divorces, high crime rates, rampant child abuse and neglect, widespread addictions, soaring sex industry, etc.) that the pernicious effects can no longer be ignored. Society must usher in a new era of ethical standards and moral integrity so that America does not crumble from within. And don't scoff, maybe some good old fashion religious and spiritual revivalism is in order.