Sunday, April 03, 2005
Our esteemed colleague Jonathan Schwarz of A Tiny Revolution introduced us to California State Senator (and Daily Kos diarist) Tom Dunn, who has a few ideas on how individual states can fight corporate corruption when federal agencies won't:
We all know the Bush Administration won't check the excesses of corporate America. As Elliot Spitzer and other reformers have found out the past few years, the very federal agencies designed to defend the public interest are too often operating as one of the biggest obstacles to integrity in the marketplace. That means it's up to progressives to play the vital role of enforcing the boundaries of appropriate business behavior. And with defenders of the accountability-free status quo in charge of all three federal branches, we've got to grab hold of every lever of power available to us . . . .Dunn's next challenge: Governor Arnold Schwarzenegger's bid to overhaul California's public pension system, which he hopes to put before voters as a special (and extremely costly) referendum in November 2005.
When the boundaries of business behavior aren't enforced, and corporate America gets caught up in a race to the ethical bottom, precious capital gets misallocated to undeserving companies, and our ability to sustain economic growth is threatened as a result.
We have the power to change that culture for the better. Let me give you just a few examples. New York's comptroller (and pension fund investor) Alan Hevesi spearheaded lawsuits in the WorldCom case that have recovered over $6 billion for investors, including a settlement with WorldCom directors that forced them to pay $20 million out of their own pockets. (I noticed DavidNYC has tracked this story here.) And Hevesi's work had an impact - the initial WorldCom director announcement was followed up by former Enron directors agreeing to pay $13 million of their own. Believe me folks, this news will have an effect on the ethos in corporate boardrooms. As Hevesi said at the time, "The job of directors is to be a fiduciary on behalf of shareholders, to demand documents, to ask tough questions of management. We believe this settlement will empower directors to do this."
Our state treasurer Phil Angelides, a reformer galvanized by watching California retirement funds lose $1B in the Enron and WorldCom debacles alone, has committed his tenure to using the "power of the purse" to advocate for more corporate responsibility. He's successfully imposed requirements on investment banks to increase disclosure and eliminate conflicts of interest before they can do business with our state. And in one of his more high-profile moves, Angelides was among the first to call out NYSE president Richard Grasso on his exorbitant compensation package. Days later Grasso resigned . . . .
Even though this group of reformers is just beginning to organize and assert their power, the radical right is keenly aware of its potential. And they're alarmed by it. Grover Norquist has said of public pension funds: "Just 115 people control $1 trillion in these funds...We want to take that power and destroy it." Then there's Stephen Moore: "The witch-hunt against corporate excess and corporate accounting scandals [is] all the rage on the left these days" . . . .
[T]he right loves to cloak itself in the language of the free market, when in reality the leaders of American big business are hard at work against competition, transparency and accountability. It's only progressives who understand the market - who understand that only the government can ensure the economy operates on the basis of integrity and fair play - that can fight back against this special interest propaganda.