Bushwhacked_ Life in George W. Bush's America Large Print - Molly Ivins [88]
On the Sunday after Bush’s hollow sermon on Wall Street in the summer of 2002, Tim Russert interviewed Securities and Exchange chairman Harvey Pitt about Bush’s attempt to gut the SEC. As Russert read from an Associated Press clip, poor Pitt—to borrow a phrase from LBJ—looked “like a jackrabbit in a hailstorm. Hunkered down and takin’ it.”
“It says,” Russert read: “President Bush’s 2002 budget proposes staff reductions in securities fraud investigations and enforcement even as the Securities and Exchange Commission acknowledges that the jumpy stock market brings more opportunities for abuse. . . . The SEC budget proposal, the first since Bush took office, also includes staff reductions in inspections of mutual funds, now owned by 49 percent of all U.S. households.”
Pitt sputtered and protested that when he asked Bush for an additional $15 million, the president had said, “No, here’s twenty million.” Russert moved on to an article from Fortune, a magazine not known for its advocacy of peasant land reform:
The SEC’s enforcement staff is stretched so thin that many in the investigation are likely to fall by the wayside. How many lawyers, you ask, does the SEC have to study the disclosure documents of 17,000 public companies? About 100, says Laura Unger, the commission’s former acting chairwoman. The number of senior forensic accountants in the enforcement division—the kind of experts who decipher Enron’s balance sheets—is far fewer than that. If that isn’t bad enough, staffers are leaving in droves. The reason is a familiar one: money. The SEC’s attorneys and examiners are paid 25 to 40 percent less than those of comparable federal agencies. Employee turnover is now at 30 percent, double the rate for the rest of the government. Which means that in three years or so, virtually the whole staff could be replaced.
The SEC budget Russert ripped apart was drafted before Enron’s collapse made the news. Six months after Enron filed bankruptcy, an SEC spokesman was trying to explain the agency’s slow response to stock market fraud. The SEC was “stretched to the max.” Its one hundred lawyers reviewed the annual reports of seventeen thousand companies. The agency’s $459 million annual budget had been frozen for ten years, and Bush was even then proposing only a 20 percent increase, a little more than $100 million. Former SEC chairs, like Unger, a Republican, were making the news-chat circuit pleading for more funding, begging Bush to double the budget just to allow the agency to handle the current caseload.
It wasn’t until January 2003, when most of the damage to the equities market had been done, SEC chair Harvey Pitt had become a household face, and investor groups were screaming for relief, that the president decided to push for an SEC budget increase. He proposed $842 million, 92 percent more than Congress had appropriated the previous year.
The Bushies had another serious second chance to get on the right side of the corporate-crime issue, by backing Maryland senator Paul Sarbanes’ accounting-standards bill. The Sarbanes bill set out to prevent accounting firms like Arthur Andersen from cooking books for companies like Enron. Of course the accounting industry opposed it. The White House also opposed it and backed an accounting-industry bill written by Ohio Republican Michael Oxley. It wasn’t until Republican congressmen began defecting like CEOs stepping forward to restate their company earnings that the White House got religion. The House passed the Sarbanes bill unanimously. A president who is slicker than bus-station chili signed the Sarbanes bill and took credit for it.
IT’S A LONG WAY from Washington, D.C., to Longview, Washington—the city that sits across the Columbia River from Rainier. “Why doesn’t the government just seize their assets?” Diane Tillotson asked. “They have so much. And pay us back the money they took from