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 stateboards of accountancy were not enforced. We know that under the Clintonadministration, both Republicans and Democrats in Congress sought to weaken thelaws governing these corporate and accounting-firm violations and to weaken theSEC. We also know that corporatists, led by President George W. Bush andRepresentative W.J. "Billy" Tauzin of Louisiana, are now pressing "reforms" thatwon't impede the nearly unbridled power of corporate managements to deplete401(k) pension funds, entice the complicity of their outside auditors, and accordthemselves 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 enforcementand turn the law into an instrument of protection for mendacious looting.Organized power to investors, workers, pension holders, and consumers: That's thefundamental reform that will generate good laws, adequately enforced.
Presently, however, these groups have no power, are not organized, and willcontinue to suffer losses. The ability of these constituencies to file civilsuits, however, is not sufficient to prevent wrongdoing. Even when successful,these lawsuits are too circumscribed, too little, too late; they seldom haveeffect. It is also rare for these lawsuits to reach the top-executive culpritswho have cashed out their billions of dollars. The massive savings-and-loanscandals of the 1980s and early 1990s illustrated these inadequacies.
In 1985 my associates and I persuaded then-Democratic Congressman CharlesSchumer of New York to introduce legislation that would authorize the chartering within each state of Financial Consumers Boards (FICUB). A FICUB wouldbe given the right to insert enclosures in corporate mailings (bills, monthlystatements, and so on), inviting customers to band together in fully staffedadvocacy associations that would act as watchdogs, testify, negotiate for, and mobilize the millions of people who are or would be preyed upon by corporateviolators. As private membership organizations, these state FICUBS would attractmillions of dues-paying members who would be reached at the peak point ofinterest--when they receive notices of overcharges or losses--or are simplyreminded by these inserts of their collective ability to be heard.
Each of the aggrieved constituencies would receive these inserts and beentitled to representation by organizations, accountants, attorneys, andinvestigators who would be chosen by, paid for, and accountable to thesecustomers themselves. People with traditional or vested pensions, or 401(k)plans, would have their own lobbies independent of corporate management, as wouldtens of millions of investors and consumers. The mail inserts would be paid forby these associations, but delivering them to their potential members incompany envelopes or electronic communications would be free. Both federal andstate governments, which spend zillions subsidizing businesses, can provide theirown facilities of communication as well in order to enhance thesemembership-based associations.
Unfortunately, Schumer's bill was voted down by the House Banking Committee inboth 1989 and 1990--even as the committee, under Democratic control, votedoverwhelmingly to authorize $50 billion in taxpayer money each year to expand thesavings-and-loan bailout.
Even if enough current members of Congress move to strengthen the existinglaws, the best of reforms will gather dust in leaden bureaucracies; that isunless the people who are supposed to benefit from those laws are organized on adaily basis with power, expertise, and drive. As Saul Alinsky once said, "Theonly way to deal with organized money is with organized people." This isespecially true when that "organized money," controlled by corporations, is thepeople's in the first place.
