12 June 2007 at 11:01:21 PM
Wrote earlier today about Bush saying, in effect, Screw You, to all the shareholders who were fleeced by the actions of the BANKS that helped Enron scam the public. Well, that was from yesterday, TODAY Bush again says SCREW YOU, as he rushes to protect the banks. (Forget all the people who were scammed out of their retirement savings not only because of Enron, but the entities that KNEW what Enron was doing and helped them do it).
The Bush administration said on Tuesday that it is not in favor of third-party class action lawsuits, dealing a blow to the plaintiffs who sought to sue banks that helped put together transactions for Enron before the company imploded in late 2001.
The president believes that excessive litigation costs hurt the American economy, cost American jobs, and discourage participation in the country's capital markets, said one White House official who asked not to be named.
"We don't want to expand the scope of class actions to include third parties," said the official, drawing the ire of the largest U.S. labor federation.
"The punchline here is that the president of the United States thinks that it's OK for investment bankers to participate in outrageous frauds on the public and walk away clean," said AFL-CIO associate general counsel Damon Silvers.
Under this type of thinking, accomplices to crimes would never be charged, because it might overwhelm the jail system and cost a lot of money to process. Better to ONLY prosecute the people who directly commit crimes, not those who help, eh, Bush?
Just more of the Bush administration's actions which have become synonymous with lawlessness.
Update: WaPost on Bush's appalling actions.
But the SEC wasn't the only government agency that Clement heard from. The Treasury Department got into the act as well. Treasury Secretary Henry Paulson sent Clement a letter recommending that the official policy of the government should be to butt out. "Treasury believes that uncertainty related to the primary liability for third parties could adversely affect domestic and international competitiveness of U.S. financial markets by posing unknown risks for entities that do a broad range of business with public companies," Treasury spokeswoman Jennifer Zuccarelli said.
In other words, Treasury argued, since capital is mobile, shareholder protections in the United States cannot be any stricter than those in Albania and the Cayman Islands, lest we lose our business edge. (Which argues -- not that Treasury has any inclination to move in this direction -- for strict, uniform global investor protections precisely because capital is global. But that's another column.) The specter of capital flowing out of the United States has been an obsession of Paulson's since he arrived at Treasury. He's argued that the obligations that the Sarbanes-Oxley Act imposed on CEOs -- having to vouch for the accuracy of their companies' financial statements, that sort of thing -- would cause capital to seek friendlier climes. The fact that U.S. financial markets are swimming in capital has not deterred him.
Paulson is nothing if not empathetic. The former Goldman Sachs chief executive still registers the pain of CEOs struggling with Sarbanes-Oxley. For that matter, Goldman Sachs is one of the defendants from which Enron's defrauded shareholders are seeking damages.
Just in case Paulson didn't pack enough oomph, still one more prominent figure came forward to give Clement his two cents: President Bush. According to Al Hubbard, the president's national economic adviser, "the president believes that it's important to make certain that we reduce the unnecessary lawsuits, because that's a very big burden to the economy which adversely impacts investors." This message, Hubbard said, was conveyed to Clement by deputy White House counsel Bill Kelley. The president's alternative suggestion was that the SEC itself was the proper body to bring lawsuits protecting investors -- not that the SEC has bestirred itself to do so on Enron shareholders' behalf in the 5 1/2 years since Enron went belly up.
In the cause of not adversely impacting investors, the president decided to keep the government from helping investors recover the savings and pensions and retirement nest eggs that they lost in the biggest swindle of modern times. The president's powers may be in irreversible lame-duck decline, but it's good to see his chutzpah is undiminished.
Back, now, to Justice, where the message from the president probably caught Clement's eye. He filed no brief, and when the Supreme Court takes up one (and possibly more) of the cases dealing with bank liability this fall, the federal government will not be there arguing for swindled investors. An appalling appellate court ruling that came down in March -- saying that Merrill Lynch wasn't the least bit liable for Enron's public misrepresentation of a shady deal it had transacted with Merrill Lynch -- may be allowed to stand. Donald Rumsfeld's immortal words have now become official federal policy, at least in regards to investors: Stuff happens.
But only to the schnooks. From the viewpoint of the powerful, the system worked perfectly. The SEC did its job, Treasury weighed in, the president dropped a hint, Justice stayed out, Wall Street prevailed. Is America a great country or what?
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