Ex-Arthur Andersen accountant: robber barons showed more restraint

[flashl]

Ex-Arthur Andersen accountant compares mortgage crisis to 2002 scandals

In the post-Enron world, Sherron Watkins was briefly a superstar. She was hailed as a whistleblower who took on some of the country's most powerful men, was co-named Time magazine's Person of the Year and was featured as the real-life hero in the award-winning documentary "The Smartest Guys in the Room."

But six years after her prophetic warnings of financial mischief brought down a Fortune 500 company, Watkins admits she can't get a job in her chosen profession of accounting, even as some of Enron's disgraced executives have moved on to successful careers at other companies.

She recently visited with The Oklahoman before a speaking engagement at Oklahoma Christian University. She likens corporate America to an emperor wearing no clothes, and warns an opportunity to contain the "ebola virus" has been lost and is leading to darker economic times ahead:

...

Q: Did you watch the housing boom and various rising economic fortunes the past few years and think, "uh-oh."

A: I agree with Paul Volker, Warren Buffett and various blue ribbon commissions who say the true measure of corporate reform is to deal with CEO pay. We've got to revise our compensation systems here in the states. CEOs on the average make over 500 times the hourly wage of the average worker. J.P. Morgan in the age of the industrial revolution said CEOs shouldn't make more than 20 times the average hourly worker. And we didn't have the Securities Commission or various government regulations.

Q: So are you saying the robber barons of the early 20th century showed more restraint than today's CEOs?

A: Yes, absolutely yes.

Q: The housing bust, the Enron and WorldCom situations, each had enormous implications on the average American consumer from lost retirements to lost homes. But for the average person, it seems very hard to get anything changed. What needs to happen?

A: To change it, it's going to take a lot of fortitude. It should start with cash-only compensation. If a person is worth $5 million, pay $5 million. Don't monkey around with stock grants and options that end up paying $45 million and end up incentivizing all the wrong behavior.

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[last1standing]

1. She's absolutely right.

I get sick of hearing even Democrats suggest that CEOs and other corporate executives deserve the outlandish amounts of cash they receive while cutting benefits and offshoring jobs. The problem is that we seem to be headed towards electing yet another pro-corporate president who will do nothing to work for the poor and middle classes.

I'll vote for the Dem in November for the sake of minority and gay rights, but make no mistake, the two most likely Democratic nominees will do very little for the long term benefit of people like you and me.

[flashl]

2. It is indeed elitist to believe that it’s OK for one person to earn 10K per hour.

[madrchsod]

3. the robber barons of the early 1900`s were ruthless

but i guess to atone for their sins they gave us libraries ,museums,hospitals, and great institutions of learning across the nation. set up non profit organizations to give away millions through the years to the betterment of mankind. the guys today could care less

[TalkingDog]

5. Unions were stronger then.

There were literal firefights(gunplay) and takeovers of factories. You're damned straight skippy they were "atoning" for their sins. If not their sins would shut their fucking factories down with a little help from labor.

It's all so much more genteel now.

Where are the Molly Maguires when you need them?



My Favorite Master Artist: Karen Parker GhostWoman Studios

[EVDebs]

6. Infiltrated by Pinkertons. Again. nt

[cascadiance]

8. And the media today is strangling us too...

Back in those days, people weren't as pressed for time and inundated with outside information like we are today. When so much of what people get today is controlled by a consolidated small set of companies, and people don't have as much time to go out and find other information from corroborating sources, it is so much more easier today for the public to be manipulated with propaganda!

[Recursion]

9. They also weren't using government power to enrich themselves

Sadly the problem now isn't lack of regulation but regulations written by and for corporations to increase their power.

[last1standing]

4. You'd think this was the kind of story that would get comments at DU.

Too bad everyone's so busy sliming other Democrats with lies and smears to bother reading or recommending this fantastic thread. :shrug:

[Yael]

7. Kicking, recommending and bookmarking

Good for her.

[GETPLANING]

10. Letter from SEC Senior-Investigator Gary Aguirre.

"Is the SEC adequately protecting the nation’s capital markets and their participants from the risk of manipulation and fraud by the nation’s 11,500 hedge funds? The answer is no.

And the answer is no whatever facts you consider. It is no when the SEC fails to recognize any hedge fund fraud or manipulation against other market participants for a quarter century: from 1979 to 2004. It is no when the SEC fails to protect mutual fund investors when billions of dollars are siphoned from their accounts by hedge funds. It is no when you compare what the SEC is doing and saying about hedge funds with what its counterparts in Europe are doing and saying….It is a deafening no when the SEC halts an insider trading investigation of one of the nation’s largest hedge funds because the suspected tipper has powerful political connections, as they did with the investigation assigned to me…

I believe our capital markets face growing risk from lightly or unregulated hedge funds just as our markets did in the 1920s from unregulated pools of money – then called syndicates, trusts or pools. Those unregulated pools were instrumental in delivering the 1929 Crash…. There is growing evidence that today’s pools-hedge funds-have advanced and refined the practice of manipulating and cheating other market participants…

Fixing the SEC so it can protect investors and capital markets from hedge fund abuse will not be an easy task. Powerful interests want the SEC to stay just the way it is or, better yet, to become even weaker. Those interests are not just the hedge funds. They include the financial industries that are receiving tens of billions of dollars in revenues for helping hedge funds cheat other market participants or close their eyes to the carnage. At the top of that list are the big investment banks, e.g., Goldman Sachs, Morgan Stanley, Merrill Lynch and Bear Stearns. Those interests know how to reward friends and punish perceived enemies. Their tentacles reach far. They stopped the hedge fund investigation I was assigned to conduct. They cost me my job.

Wall Street’s misuse of influence is nothing new…."

Enron was a groundbreaking company in terms of creating markets out of thin air and creative accounting. Enron may be gone, but their methods live on. The banking crash that is coming due to the lack of oversight by the SEC and the fast and loose policies of Alan Greenspan will take this country back to the 1930's overnight.