WASHINGTON, July 2 (UPI) -- A cloud far larger than the size of a man's hand now blots out the so-long-shining sun over the U.S. economy: The fear that U.S. major corporate business and accounting practices are riddled with corruption, greed and lies may induce hundreds of thousands of foreign investors to pull hundreds of billions of dollars out of the domestic U.S. economy, triggering a meltdown that would rival or even surpass that of the Great Depression.
How to avoid such a dire scenario? The obvious and immediate response should be to do what Franklin Delano Roosevelt so successfully did in his first term as president from 1933 to 1937: Restore teeth and credibility to the Securities Exchange Commission so that it is seen to ruthlessly and remorselessly root out, expose and penalize all fiscal corporate wrongdoing.
Only then, with a credible and incorruptible stock market cop seen to be grimly patrolling the Wall Street beat, will international investors from Riyadh to Tokyo and Moscow to Montreal be reassured.
But is there any individual of sufficient credibility and stature to take on such a Herculean task and win trust in exercising it? Consider the extraordinary number of qualities he -- or she -- would have to have.
First, they should be exceptionally wealthy themselves, worth not millions but billions of dollars. Only then, in the current climate of apparently endless corruption and corruptibility being exposed to the public eye daily, will they be believed to be above all possible financial pressure, threats and bribes.
Second, they would have to be as smart as J.P. Morgan without his debatable morals. And third, they would have to know Wall Street forward and backwards. Only people who already know every possible dubious, scandalous and sleazy secret ploy and subterfuge can possibly be expected to root them out when practiced by everyone else.
Nor is even all that enough. Fourth and perhaps most important of all, the new Super-Cop on the Wall Street Beat will have to be motivated like crazy to take on such a vast and thankless task, compared with which, Hercules' cleaning of the Augean Stables would have been like flushing a bathroom sink. Surely no such paragon could ever be found?
However, history offers us cause for optimism and even suggests a current prime candidate. At the height of the Great Depression, FDR found such a man -- the most perfect and unexpected choice imaginable -- to create and head the original SEC in the 1930s. And what was done once, as we shall see, can certainly be done again.
The SEC and its then-revolutionary oversight of top-level business transactions and corporate trading was not created or launched by viciously anti-free market communists or socialists, or distrustful anti-big business populists. It was the creation of cautious, wealthy oligarchs who feared that a tidal wave of national rage might sweep away the good with the bad and their wealth with it.
It was, therefore, no coincidence that the first SEC chairman, and arguably the most effective in its history, was one of the biggest, baddest and most brilliantly successful Wall Street traders of the Roaring Twenties, Joseph P. Kennedy, the father of President John F. Kennedy and current veteran Massachusetts Democratic Sen. Edward Kennedy.
Old Joe Kennedy accepted the need for stock market oversight and tight regulation because he realized that without it the free market capitalist system itself might be doomed. Only with such oversight and transparency of business dealings could widespread popular faith in the American economic system be fully restored. And he was absolutely correct.
Old Joe had more than a whiff of brimstone around him. But in creating the SEC, he was the right man in the right place at exactly the right time. He was the perfect example of the poacher turned gamekeeper. And he was powered on by passionate personal ambition to do the job.
He wanted to save his vast wealth for the huge, sprawling family he adored. And he was bright enough to recognize that to do that, he would have to save the very structure of American capitalism himself. And he wanted to sanitize his own extremely dubious past.
He even dreamed of being a credible candidate to become the first Irish-American and Catholic president. He succeeded in the first goal but obviously jot at the second. But he was able to propel his second son, John F. Kennedy, to fulfill it for him.
Where oh where today could we possibly find another Joseph P. Kennedy? In this era of Oprah talk shows, kindly, sympathetic psychotherapists and Prozac on tap, where could we ever find a fallen or twisted titan with so powerful a motivation to make good?
How about Michael Milken?
Here was a man who bestrode the bond markets of the 1980s with as much anger and outrage in his wake as JPK did in the Roaring Twenties. Worse, Old Joe made his money speculating on rising stocks. Milken made his billions cannibalizing old industries and setting up obvious junk bond empires. And unlike Joe, he was actually caught, metaphorically speaking, with his hand in the till. He had to do significant jail time.
Nor did Destiny let him off with that. A serious bout with cancer followed as well. The physical afflictions that only caught up with Old Joe Kennedy in his 70s hit Milken with full force in his prime.
Old Joe pretended to have become retired, mellow and respectable in his 60s and 70s to spare his son any embarrassment as they both strove relentlessly to seize the presidency. Milken has sought public atonement by throwing himself into many admirable causes. He has become one of the most generous and constructive philanthropists in American history.
But what good cause could possibly compete with rescuing the prosperity and very well being of hundreds of millions of Americans? What could be more fitting, and redemptive, than using the very same financial genius by which he amassed billions of dollars for himself to rescue hundreds of billions of dollars for the American people?
If, as heroic former New York City Mayor Rudy Giuliani has memorably avowed, great crises call forth the figures of stature needed to meet their challenges, who can compare with Milken in seeing his entire life with its dizzying highs and appalling lows as but preparation for this hour?
President George W. Bush has expressed his outrage at the latest exposes of scandal at WorldCom and vowed to root out and prevent further such malfeasance. Let him put his own political money where his mouth is and appoint as SEC chief the man with the perfect credentials to do the job. Michael Milken to clean up Wall Street!
