Remora

As the Stock Market goes from pit to pit,Business Week surveys the passivity of Washington in the face of the various CEO-gates. And hey, we used the term, stupid as it is, first, understand? Don't tell Limited Inc that you get no value from perusing our humble pages. Anyway, that the Congress is about as competent as the D.C. Police Department is no big news. Why, after all, should we expect the fence to catch the burglar, or the pimp to join the vice squad? Congress, like the Mafia, is mainly a protection racket. It has so operated with regard to regulating the Accounting industry. Paid off, the Congressman's honor and future wealth depends on doing a good job aiding the looting of businesses by the higher managerial levels. Don't look to those eminent suits to bestir themselves anytime soon, unless... well, one should always remember that capital is not a unified thing -- it is a composite of opposing interests. Money might begin to flow from an entirely different direction in this affair. So far, the interest that is represented in Congress has been the accounting interest. But there is big money being lost by big money men, every day. And slowly they are responding. Viz this graf of the BW story:


CAPITALISM "IN PERIL." So far, the business lobby has overpowered proinvestor voices. Consumer groups, the AARP, and Common Cause support reforms. But they either lack muscle or are unwilling to devote resources to fight business. The vacuum has prompted Vanguard Group founder John C. Bogle to start the Federation of Long-Term Investors, a shareholder-rights group that includes Warren E. Buffett and other prominent investors. A strong accounting oversight board is a top priority. "Our capitalistic system is in peril," says Bogle.

While the reform drive in Washington has largely stalled, the private sector is mustering a response to the market's demand for a cleanup. Dozens of corporations have fired consultants affiliated with their audit firm, and at least 18 companies have adopted shareholder proposals to make the split permanent.

Boards, meanwhile, are strengthening their audit and compensation committees with directors who have no ties to management, acting in advance of proposed new stock exchange rules. "We are seeing the beginning of a cultural shift in corporate governance," says William B. Patterson, director of the AFL-CIO's Office of Investment."

That the AFL-CIO is temporarily on the side of the investors is something to note -- after all, it is the meaner, leaner, stockholders are everything companies that are the most prone to lay off workers. While Warren Buffett likes to say the ocassionally shocking thing in public -- for instance, that he is severely undertaxed -- he is no friend of the working stiff. But ... it is little noted how much the pension funds of unions have driven that kind of mentality. In the late seventies, it was Union pension fund managers who started raising holy hell about getting value for their equities. And they were crucial allies of the corporate raiders, who then unloaded workers. If investors seriously organize -- ie start massively bribing the legislature -- the issue of reform just might gain traction again.