Blue Dogs and Greenbacks

from TomPaine.com:



Blue Dogs and Greenbacks
Al Meyerhoff
November 15, 2007


An attorney in Los Angeles, Al Meyerhoff is co-counsel for the class in the Enron shareholder litigation.


Perhaps Ralph Nader was right.

The leadership of the Democratic party recently had the rare opportunity to significantly recast the Securities and Exchange Commission (SEC). It was a highly watched choice in certain quarters—and in many boardrooms. Which Democrats would show up? Those favoring broad and systemic reform of our nation’s markets? Or "Blue Dog" business Democrats, happy with shifting campaign contributions and seeming more like Republicans every day? Unfortunately for the country, it was the Blue Dogs by a mile.

Created as part of the New Deal, the SEC, with future Supreme Court Justice William O. Douglas as its Chairman, was the ultimate Depression era watchdog—safeguarding the public from the fraud and dishonesty that so characterized Wall Street in those sad times and in these times too. For the better part of 70 years, the Commission did its job, but as markets changed and expanded, the Commission’s powers often proved insufficient. Its role also lessened—especially during the roaring 90s, when deregulation reigned supreme. Happy to fill this regulatory gap, the fraudsters came out from under their collective rocks at Enron, Tyco, WorldCom, HealthSouth and elsewhere.

Then, of course, the cows came home. The market collapsed. Americans of every economic stripe – from small investors to multi-billion dollar institutional investors—lost hundreds of billions of dollars—their pensions, their life savings, their homes, their faith in the financial system. Confidence in the integrity of U.S. markets was rocked worldwide. Suddenly everyone—the Congress, the pundits, the investors, the bankers—were all asking the same question. How could our institutions fail us this badly? Where was the SEC? Asleep at the switch, that’s where—an afterthought—understaffed, underfunded, out-gunned and by now often too cozy with The Street it was supposed to regulate.

Some of the harshest SEC critics were, of course, Democrats. The criticism was a tad muted, however; some of their own, like Clintonista Robert Rubin (now head of Citibank), had lobbied the Bush Administration on Enron’s behalf.

Slowly, we have crawled back. Congress enacted Sarbanes-Oxley almost unanimously, signed with fanfare by born-again regulator George W. Bush. The Justice Department awoke—and the worst of the lot, Ken Lay and Jeffrey Skilling and Dennis Kozlowski and Bernie Ebbers and even poor Martha Stewart went off to prison. Class-action lawsuits brought record recoveries; at least some shareholders got some of their losses back. Even the financial media, for too long the cheerleader (some would say lap dog) of corporate America finally found its voice. It was morning in America.

But now the sun may be setting again. The reform balloon in Washington has burst. Clean up Wall Street? Have you seen those Democratic campaign coffers lately? Oversight hearings? Sure, but over how Sarbanes-Oxley is making American markets "uncompetitive" in our global economy.

Meanwhile, buffeted by the price of oil and the subprime mortgage meltdown, the market shifts, turns and bounces, more of a kangaroo than a bull or bear. And what clearer evidence could there be that markets don’t regulate themselves than this subprime mess? It’s the 20s all over again—mortgage brokers giving loans willy-nilly, banks turning them into bonds, some rated "AAA" based on next to nothing, them selling them to us—at a hefty fee. ......(more)

The complete piece is at: http://www.tompaine.com/articles/2007/11/15/blue_dogs_and_greenbacks.php

It's the Blue Dogs who are working hard to marginalize the Democratic base, this is just another example of why. The corporatist agenda doesn't include average Americans except as a slave force to enable their greed.