Faceoff: Wall Street blues

By JAMES CHAPIN and PETER ROFF, UPI National Political Analysts

WASHINGTON, Aug. 2 (UPI) -- The recent wild fluctuations in the stock market and the collapse of several major corporations led to the passage of the Sarbanes-Oxley bill. What is the significance of this legislation? UPI National Political Analysts Jim Chapin and Peter Roff face off on opposite sides of this critical question.

Chapin: The Republicans Cave


The Sarbanes-Oxley bill, born of the corporate confidence crisis, is now law. According to President Bush, this represents another triumph for the administration:

"With well-timed tax cuts we fought our way out of recession and back to economic growth. And now with a tough new law we will act against those who have shaken confidence in our markets, using the full authority of government to expose corruption, punish wrongdoers and defend the rights and interests of American workers and investors.

"My administration pressed for greater corporate integrity. A united Congress has written it into law. And today I sign the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt."


There's only one problem with this statement -- it has no relation to reality.

After watching the Bush administration for more than a year, it's easy to see a pattern in the way it deals with issues. There are the few issues that it really cares about and there are the many issues that it doesn't care about but deals with only because the opposition might make some political hay out of them.

When the White House starts to lose control of an issue, it turns to what has been called "Rovism," a purely rhetorical strategy which amounts to saying that "x is a serious problem and we ought to do something about it," but then proposes no policy to deal with this policy other than exhortation, or, if the case seems really desperate, adopts small parts of the agenda which the opposition has been proposing for some time.

Empty rhetoric matched with inaction was Bush's "solution" to the massive failure of confidence on the Street. But, it turned out, the Republicans on the Hill were panicked at the thought of running for re-election with a tanking stock market, already down $7 trillion from its high.

So they and their buddies in the accounting firms ran for the hills, accepting pretty much unchanged the legislation written by Sen. Paul Sarbanes, D-Md.


Nothing was left to do but to grin and bear it -- accept the legislation and claim credit for it.

This bill is not an economic policy, and in fact the administration continues to have no economic policy except tax cuts for the rich and appointing various foxes to watch over their respective chicken coops.

Bush and Vice President Cheney, of course, have their own past corporate conduct to explain or explain away. But don't worry -- they didn't do anything wrong, because they weren't paying attention. That's comforting legally, perhaps, but not too comforting if they are our leaders -- one thought it was their "hands-on" corporate leadership that was going to make them such good leadership material. No it turns out that they were clueless then -- come to think of it, maybe that's why they are clueless now.

This administration is a "glass house" if ever there was one. It has been in bed with the people it is now criticizing and it has always opposed any serious regulation of the marketplace.

The president says that the problem is unethical corporate leaders. Where are they? He doesn't say. Here's a suggestion -- he might look at his own Rolodex of contributors and friends. No more. Of Bush it can now be said, as of Harold MacMillan, "Greater love hath no man that he lay down his friends for his life."


Roff: The heavy hand of government has been brought to bear.

No one, with the possible exception of House Minority Leader Dick Gephardt, D-Mo., and Senate Majority Leader Tom Daschle, D-S.D., were pleased that the corporate confidence crisis had major repercussions in the stock market.

The loss of so many billions in wealth is not good for the country. Gephardt and Daschle are banking on it being good for the Democrats. After all, it was Gephardt himself who proclaimed his party could pick up as many as 40 seats in November because of the economic downturn.

The Republicans are little better in this matter. Fearful, and rightfully so, of the potential for political damage, they ran for high ground, buying into the notion that some fix was better than no fix -- especially right before the August congressional recess.

It is almost certain that, beginning with the next Congress, the nation's business will at least in part be taken up by efforts to fix what the Sarbanes-Oxley bill has wrought.

Instead of being condemned, the House Republican should be praised for holding out for market-based reforms for as long as they did. The nation has been led to believe corporate pirates ignored existing laws and regulations to loot the pensions and savings of the working-class. Why should we then believe that new and, as advertised, at least tougher regulations would prevent this from happening again?


The sad truth is that this is, as is so much else, all about politics.

Since George Bush was sworn in, the Democrats have been wedded to the idea of marrying Bush to corporate interests in the minds of the voters. The current crisis plays nicely into their hands, so nicely in fact that one can wonder if they somehow knew this was coming. After all, it was their team that was in charge of the regulatory and enforcement side for eight years.

In any event, there is plenty of blame to go around. Democrats are equally vulnerable to the charge being leveled against Bush and the Republicans on Capitol Hill that they were "too influenced by "big business."

Between 1989 and January 2001, Sen. Joseph Lieberman, D-Conn., the chairman of the Senate Governmental Affairs Committee, received over $82,000 in campaign contributions from the accounting industry; Sen. Chuck Schumer, D-N.Y., who is one of the leading critics of GOP ties to business interests, got just over $340,000. And Sen. Hillary Rodham Clinton, D-N.Y., who had something more than a passing association with the previous administration, received in excess of $72,000.


The Center for Responsive Politics also reports that Lieberman, between 1997 and 2002, received more than $800,000 from the "Finance/Insurance/Real Estate" sector -- far and away his largest single funding source. The same can be said for Sen. Paul Sarbanes, D-Md., who was given slightly less than $400,000 from that sector, trumping labor, his next biggest single source of funds, by almost $100,000.

The real problem, as far as Washington is concerned, is not the spread of corporate influence; it is that elected officials and the media, more importantly, still measure a commitment to problem-solving by the amount of taxpayer money one is willing to spend, the number new regulations one is willing to support and the number and size of fines one is willing to levy whenever a problem appears -- regardless of whether those actions will make things better and, often, ignoring the ways in which they might make things worse.

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