Small Favors | Molly Ivins

Wall Street's Mascot

Or maybe not so gently, since failure to fix it is likely to cost so much that $7 trillion will look like chump change. Our political system is so broke it took seven years to react to the savings and loan crisis, which was caused by the political system in the first place. That cost us only $500 billion. If they take seven years to stop this hemorrhage, we'll be totally sunk.

Step Numero Uno: public campaign financing. This mess is not just about corporate greed; it is just as much about political corruption.

Perhaps the least edifying sight so far is that of politicians pointing their fingers at the CEOnistas and clucking over their greed. First and funniest was President Junior, whose entire business career was this very same corporate scandal writ small. The man is the mascot of crony capitalism. Listening to his lecture to Wall Street about their need for moral rearmament and better business ethics was first-rate entertainment.

Years of covering politics have given me a cast-iron stomach, but the sight of Representative Billy Tauzin, Republican of Louisiana, posing as a born-again populist is enough to gag a maggot. This is the same Billy Tauzin who led the charge on every sell-out to corporate special interests of the last ten years.

Then there's Mr. Morality, the oh-so-pious Senator Joe Lieberman, well watered by campaign contributions from the Big Five accounting firms to make sure they weren't regulated. Whew, what a stench!

The pols need to turn those pointing fingers right at themselves. Starting in 1994, when the Financial Accounting Standards Board was preparing to rule that stock options must be treated as a company expense--a step that would have reduced corporate earnings and thus deflated stock value--the high-tech and securities industries vehemently opposed the move. Lieberman leaned on the board to back down, and it did. Lieberman is number thirteen in the Senate for contributions from the securities and investment industry. That move set up the explosion in executive compensation and gave CEOs a huge incentive to artificially inflate their stock prices.

The next step was in 1995, when Congress passed the Private Securities Litigation Reform Act, which makes it harder for shareholders to sue corporations. This act also allowed executives to make absurd claims about future earnings by scrapping the old prohibition against forward-looking statements.

There are basically only two ways to control capitalism: One is by government regulation, and the other is through the courts. Wave after wave of "tort reform" made corporations increasingly sue-proof. The much maligned trial lawyers and their so-called frivolous lawsuits actually functioned like the sharks they are so often compared to. If a corporation stuck a hand outside the law, a shark would swim by and bite it off, as it were, by suing for lots of money, a lovely incentive for decorous corporate behavior. But the politicians have been killing off the sharks.

Bill Clinton vetoed the '95 Litigation Reform Act, but it was passed over his veto with help from Senator Chris Dodd of Connecticut, among other Democrats.

The third horror was the successful efforts in both 1999 and 2000 to prevent the SEC under Arthur Leavitt from forcing accounting firms to separate their auditing and consulting functions. Forty-six Senators and Representatives wrote Leavitt in protest. They received, on average, $93,000 in campaign contributions from the Big Five.

All of this is not the fault of corporate greedheads; it is the fault of a corrupted political system. It is a consequence of legalized bribery. It is about campaign finance. That is the "without which" nothing will come out of this mess.