Krugman: Enron and the System

[RamboLiberal]

http://www.nytimes.com/2004/01/09/opinion/09KRUG.html

Two years after Enron, then one of America's most admired companies, was revealed as a fraud, prosecutors finally seem to be getting somewhere. Andrew Fastow, the company's former chief financial officer, and his wife, Lea, are reported to be engaged in plea-bargaining. Mr. Fastow's testimony will probably lead to charges against other former Enron executives.

But it would be a big mistake to conclude that the system is working. It isn't.

For one thing, the progress in the Enron case is something of a fluke — sort of like convicting Al Capone for income tax evasion. The charges against Mrs. Fastow don't focus on dubious corporate deals; they focus on her failure to report the personal kickbacks she received from participants in those deals. And it's still unclear whether the company's top executives will ever face charges.

More important, in political terms the statute of limitations may already have run out. The political figures with the most direct ties to the Enron scandal, former Secretary of the Army Thomas White and former Senator Phil Gramm, are no longer in office. War and a rising market have, at least for the time being, diverted attention from the role of other political figures whose deference to corporate demands aided and abetted Enron and other corporate malefactors.

[Clark4VotingRights]

1. Good stuff, as always from Krugman.

"Yesterday Gen. Wesley Clark made an appearance with Sherron Watkins, the Enron whistle-blower, and promised to crack down on corporate tax shelters. Howard Dean has also made a crackdown on tax shelters a central plank of his campaign. If these or other candidates actually succeed in making corporate abuse into a successful campaign issue, we may finally see some real reform.

Wouldn't that be nice?

[muriel_volestrangler]

2. What's the current treatment of stock options?

"Companies might have issued fewer options, and accounting fraud might have been less of a problem, if accounting rules had required companies to count the issue of stock options as a cost, rather than pretending that they were somehow free."

Are they being treated as a cost to companies yet? It seemed so obvious to me that they should be that I just couldn't believe it when I was told they weren't. Until they are, company accounts are just wishful thinking - and a timebomb waiting to go off, both for the individual companies, and the whole economy.

[SahaleArm]

3. Currently toothless - FASB asks for them but not SEC enforced n/t

[DarkSim]

4. Good stuff

I find the whole enron case very interesting.

[Beetwasher]

5. Lieberman is a Disgusting Piece of Shit

"But in 1994, when the Financial Accounting Standards Board tried to issue a rule to that effect, companies that issued lots of options mounted a lobbying campaign. And politicians rushed — in a fully bipartisan manner — to be of service. Senator Joseph Lieberman took the lead: he introduced a resolution opposing the change, the resolution was approved 88 to 9, and the board backed down."

Fuck you Lieberman...

[priller]

7. Liberman also chaired the first "see no evil" congressional

investigation into Enron. It was a joke.

[papau]

6. Great Krugman - again!

http://www.nytimes.com/2004/01/09/opinion/09KRUG.html

Enron and the System

"Yesterday Gen. Wesley Clark made an appearance with Sherron Watkins, the Enron whistle-blower, and promised to crack down on corporate tax shelters. Howard Dean has also made a crackdown on tax shelters a central plank of his campaign. If these or other candidates actually succeed in making corporate abuse into a successful campaign issue, we may finally see some real reform. But right now, two years after Enron imploded, we have to say that the system is still broken."

[tom_paine]

8. kick for Krugman!

:kick: