The Washington Post reports that in recent weeks, "stock markets shuddered because of concerns that risky mortgage loans are cracking the foundation of the housing sector" while "federal grand juries indicted managers who gamed compensation documents to guarantee themselves fat paydays." That has led to the Securities and Exchange Commission's announcement "that it is hunting for evidence of rampant insider trading that cheats average investors." So what, pray tell, is the response from the Bush White House and Corporate America? Pledges to clean up its act? Promises to crackdown on fraud? Absolutely not. Instead, we get this tag-team effort between CEOs and the Bush administration:
"The organized drive to scrap [post-Enron accounting rules] began last fall with the creation of the Committee on Capital Markets Regulation, a group that won the blessing of Treasury Secretary Henry M. Paulson Jr....Paulson is mobilizing some of the nation's most high-wattage financial luminaries, including former Federal Reserve Board presidents Alan Greenspan and Paul A. Volcker and chieftains from Berkshire Hathaway, General Electric and J.P. Morgan Chase, to appear at Georgetown University tomorrow...Among the items the U.S. chamber panelists will promote in their report Wednesday are top-to-bottom reforms at the Security and Exchange Commission, which they say is staffed with too many lawyers who create and enforce rules..." (emphasis added)
Yes, of course - the problem plaguing our economy is not executives ripping off shareholders and pensioners through shady stock schemes or inflated pay packages, but government regulators who have the audacity to enforce rules that prevent such shenanigans. This is the K Street equivalent of a 12-year-old's whine that his parents are being "unfair" when he gets sent to his room for giving his little brother a dead arm.
The most mind boggling part of this deregulatory effort is not Corporate America's behavior (predictable) or even the White House's complicity (also predictable). It is that in the face of rampant corporate fraud, arguments attacking the enforcement of basic rules are considered serious and legitimate among the elites who dominate our political and economic discourse.