Net Loss: Internet Profits, Private Profits and the Costs to Community
Other Tech Writing
Election 2000 & After
Older Political Writing
Special Topic Pages
by Nathan Newman
August 01, 2002
Well, you can see the rightwing talking points in motion, as telepundits and rightwing scribblers now mouth the mantra-- Clinton's lying about a blowjob led corporations to think it was okay to defraud the public and encourage trillions of dollars in phantom speculation.
Now, Clinton was too soft on corporate interests in a number of instances, particularly in trade deals, but on this issue, Clinton does not deserve the abuse. In fact, he deserves praise for fighting during his Presidency against the brokerage fraud and auditors lobby.
Aside from the silliness of the GOP line (and the echo of Newt Gingrich's sociological explanation that liberalism led to that Florida mother deliberately driving her kids into a lake to their death a few years ago), it's just a way for the Republicans to cover up their own sins.
In 1995, the new Gingrich-led Congress passed a law that said it was largely okay for companies to lie about expected revenues, as long as they included boilerplate legal fine print noting the speculative nature of their promises. This law, the Private Securities Litigation Reform Act of 1995, also made it far harder for plaintiffs hurt by corporate lies to even get into court to try their case. It is largely due to that law that despite investors losing trillions of dollars, few corporate executives have been held responsible for the lies used to pump up share prices during the tech bubble.
And Clinton's role? He vetoed the damn thing, and it only passed because Congress overrode his veto. If anyone deserves to be saying "I told you so", it's Clinton. The GOP leadership should be embarrassed at their hypocrisy.
While Clinton said he was willing to support reforms that decreased frivolous lawsuits, he saw this 1995 law as an attack on honest plaintiffs that would hurt investors scammed by companies. And he was right. In Clinton's veto message, he wrote:
I am not, however, willing to sign legislation that will have the effect of closing the courthouse door on investors who have legitimate claims. Those who are the victims of fraud should have recourse in our courts. Unfortunately, changes made in this bill during conference could well prevent that.Yet the GOP and enough Democrats voted for the law to override Clinton's veto. In fact, due to corporate lobbying, this was the only veto Clinton made in his Presidency which was not sustained by Congress. Clinton was standing shoulder to shoulder with Nader on this one.
And Clinton's actions did not stop there. His appointee as head of the Securities and Exchange Commission (SEC), Arthur Levitt, repeatedly warned that the collusion of brokerage houses and auditors with clients was a recipe for fraud and abuse. Levitt early on criticized "earnings management" that was leading to accounting abuse and fraud. His SEC passed a "Fair Disclosure" regulation to prevent companies from passing on select information to favored brokerage houses, but not to the general public. But when Levitt proposed tighter regulation of auditors, the industry fought back with one of the ugliest lobbying campaigns in SEC history that brought Congressional attacks which forced a watering down of the proposals. While Clinton and Levitt could no doubt have done more to defeat the financial fraud lobby, it takes cajones the size of Texas for the GOP leaders, who pimped for the auditing industry, to try to divert attention from their own actions.
And on the particular issue of WorldCom, the Clinton administration was quite tough in blocking its merger mania. When WorldCom merged with MCI, Clinton's Federal Communications Commission forced the company to sell off MCI's Internet business to Britain's Cable & Wireless. And when WorldCom sought to takeover Sprint , the FCC attacked the deal and the Clinton Justice Department blocked the merger on antitrust grounds. This not only helped consumers but was hailed by the labor movement, who did not want to see the two major non-union telephone carriers combined in a new colossus.
Given that Bush was investigated for insider trading in the early 90s and Cheney is still under investigation by the SEC for his role at Haliburton, the GOP should not be given an inch on the issue of who was responsible for letting loose financial fraud on the American landscape. It was Republican leadership (assisted by too many Democrats) in both the boardrooms and in Congress who facilitated this fraud. And however they try to cook the history books, they had to push their fraud forward over Clinton's veto.