But more than the intelligence community lay asleep before last September. Indeed, by October 2001 we learned that another menace had snuck up undetected on our busy and happy pre-attack nation. Enron.
Before last October I would have challenged almost anyone to explain stock options, Bermuda tax-shelters, and energy trading. Now, of course, we are all arm-chair experts. And with Worldcom and an investor crisis now driving the market south, the small-time investors, like us at Cloudjammer, have to ask: How did it get like this? What can we do to fix it?
Dubya revealed his suggestions last week when he addressed corporate responsibility to Wall Street. The solutions he suggest illustrate – painfully – the inequities of our corporate system. Some highlights:
- Double prison terms from five to 10 years for corporate executives convicted of fraud.
- Executives who benefit from false accounting must forfeit their fraudulent earnings.
- CEOs much vouch for their companies' financial reports.
- Convicted corporate leaders are barred from ever serving on publicly-held companies again.
- Accounting firms must submit to an independent board to oversee the industry and prevent self-compromise (as in Anderson's case).
John Stewart called it last week: "Did Wall Street have any rules before this? Could you just shoot a guy for looking at you wrong?"
Seriously. How were initiatives like these never implemented before our current market crisis. Did no one at Anderson ever suggest, "Hey, maybe stock options should appear on corporate financial statements...I mean, that would be a more honest projection of profit, right?" Certainly we're all out to make money, but come on. Cheaters always get caught. Always. Right?
Not if they're actively undermining the SEC. Enter the political parties.
What we find truly unsettling is that suggestions like Bush's have been made before. As recent as 1994, the Financial Accounting Standards Board, a non-profit accounting-industry watchdog group, proposed that employee stock options appear on corporate balance sheets. A Senate resolution – authored by former vice-presidential nominee Joe Lieberman, no less – crushed the proposal 88 to 9.
Ah. So here's the problem. We have a transparent corporate campaign finance system in which large business, driven by sometimes-fudged profits, put members of both parties in office. The politicians, at least until this recent outrage, protected their benefactors and their own shares and count on the accounting industry to police itself. In fact, they resisted federal policing of any kind. Makes you wonder just who knew what when, eh?
But who among us can blame them? Certainly we all grieve for the millions who've lost some or most of the 401K and stock holdings. Certainly we despise the obvious and unapologetic abuse of trust, confidence, and investment. But who among us wasn't excited during the 90's boom-bubble? Our jobs and our portfolios paid well...damn well. Meanwhile Washington and Wall Street fudged a little here, changed a smidgen there, and we all came out richer.
But times change and now we're pissed.
It makes me think of a billboard that briefly hung over 85-South this past April. It was a Maker's Mark sign that showed a bottle of the liquor alone on a black field and presented the following tag line: "Disappears faster than a big-5 accounting firm." Within days the text was backed out – no doubt by Anderson apologists. As if erasing the remark would make its memory any less potent. If only Arthur Anderson had time to prepare a financial statement on the federal deficit before it's final death rattle last month. If only we'd all looked down, once in a while, and realized that the streets of our new America were not necessarily paved in gold but lined with options. fb