Ignoring The Lessons Of Enron and Worldcom - Outrage As A Distraction From Real Reform

[Median Democrat]

The Republicans have mastered the art of using political outrage over corporate greed as a distraction to avoid true reform. George Bush presided over the Enron and Worldcom scandals, but when they occurred, the Bush White House pushed the outrage meme, and focused on criminal prosecutions, rather than substantive change in regulations to prevent such frauds. Indeed, while the Bush Justice Department publicly prosecuted Enron's executives, the Bush White House refused to support California's efforts to invalidate Enron's energy contracts that were inflated through Enron's market manipulation.

Now, we have the AIG bonus issue, which is being transformed into a huge whodunnit, aided by Republicans and scandal hungry press. Republicans and Democrats are trying to out-do each other in blaming other politicians and executives, and calling for criminal prosectutions.

However, like Enron and Worldcom, these efforts actually obscure the real problem by portraying AIG, like Enron and Worldcom, as isolated bad actors, rather than part of a systemic problem. The idea being pushed by politicians and the media is that the system is not broken, rather we just have a few bad apples. Thus, the flames of outrage are fanned towards a few individuals, such as Tim Geithner or AIG's CEO, as though firing him and perhaps the current CEO of AIG will make everything better. It won't. The prosecution of Kenneth Lay did nothing to prevent to the current economic crisis. It just distracted from the lack of regulation.

The bonuses did not cause the AIG meltdown and loss of billions of dollars of taxpayer money. Its the fact that AIG was allowed to operated without any regulatory oversight in the first place.

So, the question is whether we get duped into this media fanned outrage and ignore the need for real reform. Yesterday, I asked who regulated AIG prior to its collapse in September 2008. I received multiple answers. Obama yesterday spoke of the need to enact comprehensive regulations that address companies like AIG. However, I bet that like Enron and Worldcomm, this call will be drown out by the financial media.

Finding scapegoats and villains is the corporate media's way of providing the public with shiny objects to distract them from the real systemic problems. If Obama was Bush, he would simply announce a criminal prosecution of someone at AIG, and portray that person as the bad apple.

IMHO, I hope that Obama resists this temptation and actually pushes for the adoption of comprehensive regulations of the financial industry. Despite the warning of Enron and Worldcom, Bush did nothing to improve financial disclosure rules. Instead, he appoited Chris Cox, a hands off regulator to head the SEC.

Theater versus reform. Most people, including DUers, prefer the excitement of political theater. Reform requires vision, patience, and persistence.

[FrenchieCat]

1. Andrea Mitchell is becoming a real Investigative Journalist!

:sarcasm:

[GOTV]

2. Right. We need fewer youtube videos of outraged reps and more legislation and legal action....

... They think if they're sufficiently chastising of the execs that come before them, we won't notice that they didn't actually do anything once the cameras were turned off.

[Median Democrat]

4. Yet, That Is Exactly What Happened With Enron and Worldcom, And Is Happening Now

We are getting a lot of political theater and finger pointing, but even though the subprime market has been blowing up since 2007, we STILL do not have any reform on how derivative securities are regulated. We still have a balkanized regulatory system. Indeed, when you factor in Enron and Worldcom, the travesty is even greater.

For all the Republicans calling for Tim Geithner's head, they need to be asked whether they will support real reform, and what did they do following Enron and Worldcom. However, as Sean Hannity and the Republicans at the hearing demonstrated, they are actually going to use bonus gate to support the argument that government should NOT intervene or regulate.

Yup, its Bobby Jindal using Katrina all over again to paradoxically argue for less government interference. This is the big picture. So, lets see if the American people get fooled again by the spectacle of political theater as they were during the Enron and Worldcom scandal.

[GOTV]

5. I agree. No matter how angry a pol sounds all I hear is complicity till something other than ...

... their mouthes get in gear.

[Median Democrat]

6. Delete

Dupe

[Nicholas D Wolfwood]

3. Agreed on all counts.

I like the idea being floated by the Obama camp to create an FDIC authority to ensure that allowing something like AIG (getting to big to fail) to occur again won't be an utter disaster. And yes, most here prefer theater - why do you think the protest threads are so popular?