From The American Prospect
Publication Date: 25-MAR-02
THE ENRON SUPERMARKET OF CORPORATE crime, fraud, and abuse has engendered its own media frenzy and congressional investigative momentum to document the wrongdoing and the harm to innocents; it will likely also stimulate civil lawsuits and criminal prosecutions. The question that remains is whether federal and state governments will enact anything beyond Band-Aid reforms–whether they have the willpower to go after what George Will called “a systemic crisis of capitalism in this country.”
We know that existing laws at the Securities and Exchange Commission and state boards of accountancy were not enforced. We know that under the Clinton administration, both Republicans and Democrats in Congress sought to weaken the laws governing these corporate and accounting-firm violations and to weaken the SEC. We also know that corporatists, led by President George W. Bush and Representative W.J. “Billy” Tauzin of Louisiana, are now pressing “reforms” that won’t impede the nearly unbridled power of corporate managements to deplete 401(k) pension funds, entice the complicity of their outside auditors, and accord themselves compensation packages that would be the envy of Croesus.
What has not been discussed are the shifts of power that would seriously challenge the capacity of the corporate government to anesthetize law enforcement and turn the law into an instrument of protection for mendacious looting. Organized power to investors, workers, pension holders, and consumers: That’s the fundamental reform that will generate good laws, adequately enforced.
Presently, however, these groups have no power, are not organized, and will continue to suffer losses. The ability of these constituencies to file civil suits, however, is not sufficient to prevent wrongdoing. Even when successful, these lawsuits are too circumscribed, too little, too late; they seldom have effect. It is also rare for these lawsuits to reach the top-executive culprits who have cashed out their billions of dollars. The massive savings-and-loan scandals of the 1980s and early 1990s illustrated these inadequacies.
In 1985 my associates and I persuaded then-Democratic Congressman Charles Schumer of New York to introduce legislation that would
authorize the chartering within each state of Financial Consumers Boards (FICUB). A FICUB would be given the right to insert enclosures in corporate mailings (bills, monthly statements, and so on), inviting customers to band together in fully staffed advocacy associations that
would act as watchdogs, testify, negotiate for, and mobilize the millions of people who are or would be preyed upon by corporate violators. As private membership organizations, these state FICUBS would attract millions of dues-paying members who would be reached at the peak point of interest–when they receive notices of overcharges or losses–or are simply reminded by these inserts of their collective ability to be heard.
Each of the aggrieved constituencies would receive these inserts and be entitled to representation by organizations, accountants, attorneys, and investigators who would be chosen by, paid for, and accountable to these customers themselves. People with traditional or vested pensions, or 401(k) plans, would have their own lobbies independent of corporate management, as would tens of millions of investors and consumers. The mail inserts would be paid for by these associations, but delivering them to their potential members in company envelopes or electronic communications would be free. Both federal and state governments, which spend zillions subsidizing businesses, can provide their own facilities of communication as well in order to enhance these membership-based associations.
Unfortunately, Schumer’s bill was voted down by the House Banking Committee in both 1989 and 1990–even as the committee, under Democratic control, voted overwhelmingly to authorize $50 billion in taxpayer money each year to expand the savings-and-loan bailout.
Even if enough current members of Congress move to strengthen the existing laws, the best of reforms will gather dust in leaden
bureaucracies; that is unless the people who are supposed to benefit from those laws are organized on a daily basis with power, expertise, and drive. As Saul Alinsky once said, “The only way to deal with organized money is with organized people.” This is especially true when that “organized money,” controlled by corporations, is the people’s in the first place.