In this economic downturn, Americans are clear that the business community has a huge impact on the welfare of the entire nation. In part, because our government has rescued private companies with taxpayers’ money, the intersection of Wall Street and Main Street is clearly visible. News stories about corporate governance failures, violations of securities laws and corporate criminality are no longer confined to the business section or financial media. Because average Americans have been asked to save the private sector, business news has become mainstream. The Savings and Loans debacle of the 1980s was one of the first mainstream business stories. The 1990s “dotcom” bubble and its bursting were reported on the front pages of newspapers and described on television and radio programs that typically devoted little time to business news. And of course, the recent economic downturn and the private sector excesses that contributed to it are reported in all of the major news outlets used by average Americans who are outsiders when it comes to business.
Business news became front page news at the beginning of this decade with the bank failures of important companies such as Enron, WorldCom, Tyco, and Adelphia. The disgraced leaders of these firms became public icons of corporate greed and hubris. Ken Lay, Jeffrey Skilling and Andy Fastow of Enron were tried and convicted. Bernard Ebbers of WorldCom, Adelphia’s John Rigas, and Tyco's Kozlowski were sent to prison. All of this was reported by the mainstream media, resurrecting the confidence of the American public.
Jefferey Skilling’s conviction was confirmed by a federal appeals court, the Fifth Circuit, but his sentence was vacated. It is not surprising that Skilling appealed his conviction. Appeals are routine. Skilling’s sentence was vacated, and a hearing date, July 30th, was set for his re-sentencing. (His re-sentencing, however, was postponed.) None of this surprises me either. But I am surprised that these details have been largely confined to the business media. Most Americans would want to know that one of the key architects of Enron’s downfall may get less jail time. And many of these Americans do not follow business news.
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ReplyDeleteIn my view the current economic crisis has its roots in distorted incentives--including the very inadequate law enforcement response to the Enron scandals.
ReplyDeleteWe live in a bizarre reality where every political leader wants to get tough on petty crimes (usually committed by persons of color) while billion dollar frauds (usually committed by rich white men) go largely unpunished.
I'm retired, living on a fixed income but, by way
ReplyDeleteof taxes, I'm compelled to help rescue private, greedy, cheating companies. How do I get rescued when my limited resources are unable to meet my
necessities (mortage, utility bills, propertry
maintenance, food and other essentials)? I'm not
eligible for welfare or other amenities made available to lower income citizens.
Even though these large corporations, like Enron
and their leaders, are rescued one way or another
through the stimulus package, top executives are
receiving outlandish bonuses. Yes, mainstream
America needs to know what is going on in the
business community but knowing doesn't fill my
pocketbook.
Thanks for the information about Skilling's re-sentencing
ReplyDeleteI'm not surprised the American public was generally apathetic towards news of the U.S. Court of Appeals' decision to vacate Jeffrey Skilling's sentence. In fact, I only recently discovered the U.S. Supreme Court will be hearing questions presented by Skilling's appeal within the month.
ReplyDeleteIt really is sad that news stories such as these are so commonly relegated to the newspaper's business section. When Kenneth Lay passed away, I recall there was sparse news coverage as well. Except for the former employees who were directly affected, it seems America's anger was directed toward the company itself rather than the men pulling the strings. It's little wonder then, that the trial and sentencing of Bernie Madoff received front page news, while Sklling's did not. Madoff, like Enron, was the big name that received all the press. No one was behind the scenes of Madoff's ponzi scheme (after Madoff himself), and the American public showed little concern for the epilogue for those behind the scenes at Enron.