Organizing People

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.