Wednesday, February 14, 2007

Meanwhile, the Bush Administration Is At It Again

No, I'm not talking about the latest attempt by the Bush Administration to start another war. Many people have noticed that when Bush is busy making noise about some big issue, strange things tend to happen when nobody is looking. Here's a business story by Stephen Labaton of The New York Times that has not gone entirely unnoticed:
The Securities and Exchange Commission has begun to take steps on two fronts to protect corporations, executives and accounting firms from investor lawsuits that accuse them of fraud.

(snip)

Critics said that the moves signaled a major retrenchment from the post-Enron changes and showed that a lobbying push by big companies, Wall Street firms and the accounting industry was gaining traction as they seek to roll back what they see as onerous regulation and excessive investor litigation.

(snip)

Institutional investors and some analysts expressed alarm at the developments, noting that the number of shareholder lawsuits was declining significantly. “It is clear from these actions that this is a commission intent on reversing seven decades of rule making, by Democrats and Republicans, that have protected investors and opposed shielding auditors,” said Lynn E. Turner, a former chief accountant at the commission and the managing director of research at Glass Lewis, an adviser to large shareholders. “This administration and this agency are very pro-business and anti-investor.”

Now let's think about this for a moment. It was the failure of an accounting firm to do its job that partly led to the collapse of Enron; in fact, the accounting firm got too cozy with Enron executives and ignored some alarming signs of trouble. But the Bush Administration wants to go back to the games that Kenneth Lay and Jeffrey Skilling were playing. Now the Bush Administration is cutely arguing that we need to protect the four remaining accounting firms. Wouldn't more accounting firms increase the competition? Wouldn't tighter rules for the accounting firms make them less susceptible to lawsuits in the first place?

Let's think about this a little further. Wasn't Bush the one who was pushing for the privatization of Social Security so that individual Americans could invest in the stock market? With the rule changes the Bush Administration is proposing, small investors and even pension funds would be at greater risk of losing their money to fraud. Hmmm, our government at work courtesy of George W. Bush and friends.

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