Crooks With Stock Options

A comedienne once remarked “I’m no longer scared to walk through the ghetto late at night. If I get mugged, they only get what I have with me at the time. But when I get jacked by a corporate crook, he steals my future! Next time I see a white man with a brief case and Wall St. Journal coming towards me, I’m crossing the street!”

It’s high time that corporate crooks get the same treatment as muggers, drug dealers, and carjackers. Instead of having these guys climb out of limousines in front of the courthouse under escort of smiling lawyers and their pretty wives, they should be shackled like common thieves dressed in jailhouse jump suits, and dragged by armed guard from the bowels of some hellish city lock-up. There is no reason to treat them any differently than other villians who commit Class A felonies or engage in conspiracy to defraud the public or the government.

The government is also to blame here for not doing its job. One only has to follow the prosecutions and investigations conducted by the NY AG Eliot Spitzer to know just how well the regulatory commissions have been handling corporate criminality. The SEC is a huge joke, and is run by a crony of big corporations; a man who routinely ignores flagrant violations of anti-trust and insider deals. On the other hand, Eliot Spitzer, who has a practical understanding of Wall St., is exposing the rampant criminality that goes on with the tacit consent of Federal agencies mandated to oversee their financial practices. Spitzer, who in my estimation is a hero of the common man, cannot get the Federal government to pursue many of the cases he brings forth, because the heads of these departments are presidential appointees, chosen for their ability to 'turn the other cheek' when someone else is being slapped.

It is not that Spitzer is now suddenly exposing how big fish eat the little fish. The anti-trust laws are supposed to prevent that from happening. Spitzer's revelation is that these companies are nibbling extra little bites from everyone and everything, and once you connect the financial 'dots' of their scheme, you find that billions of investor, shareholder, and premium dollars are being diverted from honest companies and hard-working investors. A little extra bite here and another over there will add up. Spitzer has prosecuted fraud and price fixing in the insurance industry, bloated fees on mutual fund transactions, and, thankfully, has brought these companies to settlements where the consumer, rather than the state, is compensated for the losses. As he puts it, “It is not the state that has been robbed, but the people. The monies should go back to them.” Spitzer understands, as do all good Progressives, what is good for the people is good for the state. Companies are anxious to clean up their practices and go 'straight' as soon they get that first phone call from one of Spitzer's associates.

Among the common sense arguments we can offer in favor of better regulatory practices is the simple arithmetic. We hear unbelievable dollar amounts in blurbs on the evening news, but do not realize that these numbers have faces behind them. When Enron practices accounting ‘irregularities’ to boost its venture capital and ultimately collapses, who are those faces? Why aren’t we seeing them? Those faces belong to the hard-working people whose pensions were placed in the hands of Enron for safekeeping and the promise of the company to do all it could to elevate the value of those investments. People’s financial futures were ruined because a man who already made outrageous sums of money wanted to make even more just overnight! The FBI compiles yearly estimates of dollar damages from person on person crime, but no amount of damages have ever been gauged as to just how much corporate criminality really costs the American public. I'm almost afraid to find out.

These schemes also hurt other businesses. The value of a stock is dependent upon ratings issued by the SEC, based on the accounting submitted by the company, and their projections for the next fiscal quarter. The borrowing and bidding power is based on that very important rating. By showing a profit they become instant financial darlings. When WorldCom creatively spun its numbers to show it in the black and thus garnered a larger borrowing ability, other companies, such as AT&T, where honesty still reigns, lost contracts and market share directly as a result of WorldCom criminality. When AT&T loses, so do their employees and shareholders. In the end, WorldCom still received the government contracts it had sought after. This is but another shameful example of corrupt business and corrupt government in collusion. How does a government that claims to abide by the rule of law, enter into agreements with corporations that violate the law? If an individual commits a felony, he can’t even find a job, let alone be offered a $4 billion dollar contract by the same government that prosecuted him!

How many more General Electrics, WorldComs, Enrons, Tycos, and Arthur Andersons do the American people have to see before they get the message? These are the same cadre of gangsters and crooks that GW Bushwacker wants to have administer Social Security! How soon we forget that Social Security was started in reaction to the fickleness and corruption of those very same markets!

On the plus side, recent changes in the IRS enforcement policies now have them targeting some of the wealthy cheats. Bernie Ebbers, who throughout his trial insisted that he knew nothing about the creative accounting practices of his CFO, will hopefully face a long prison term. Kenneth Lay is next, and let’s hope our government makes examples of them as a warning to others who believe their quasi-religious pursuit of greed affords them license to stray beyond the rule of law and common decency.

"There is enough for everyone's need, but not for everyone's greed."