Both energy bills are bad
Now some fools want to fire Treasury Secretary Paul O’Neill, the only straight-shooter in the Cabinet. Tell you what I like about O’Neill: He’s from Widget World. This Cabinet is wall-to-wall corporate America, but most of them — including the president — are from Enron Economics, whereas O’Neill was CEO of a business that makes something useful, to wit, aluminum.
As many economic poohbahs have been at pains to explain to us lately, out there in Widget World, where people produce actual goods and provide useful services, things are going along quite nicely.
It’s the financial sector that’s the disaster, the part where they play fancy games with other people’s money for a living. That’s Enron Economics, the land of stock options, commodities futures, derivatives, swaps, financializing markets and offshore partnerships.
Before we get back to our ongoing project of connecting the consarn, dag-rabbiting dots between corporate theft and government corruption, let’s see if we can stop Congress from actually making things worse. Good project, eh?
Members of the House and Senate are now meeting in conference committee over their respective energy bills, and it’s a challenge to figure out whose is worse.
The House bill repeals a key consumer protection law, the Public Utility Holding Act. Public Citizen, the consumer research outfit, says repeal will “further deregulate the energy industry and allow more Enron-like manipulations. Enacted decades ago to protect consumer from rapacious electric companies, the Holding Act is one of the few remaining federal laws regulating the nation’s giant power companies. Repealing the law will allow those companies to embark on another frenzy of mergers and acquisitions, and encourage corporate financial escapades in far-flung, risky ventures that have nothing to do with providing reliable and affordable electricity service to consumers — an essential commodity.”
In fact, that’s just what the Holding Act does — prevents utility companies from investing the rate-payers’ money in areas that will not directly contribute to low bills and reliable service. If this law goes, derivatives market, here they come.
Also of note in the almost-equally disgusting Senate bill is a plan to provide federal insurance for the nuclear industry, which is so risky it cannot get insurance in the private market, so now it wants the taxpayers to subsidize its future Three Mile Islands.
And now, back to some older dots. The 1995 Private Securities Litigation Reform Act is a little gem you should not miss. So easy to overlook, yet so damaging. The bill was passed by the Republican Congress over Bill Clinton’s veto, which means Republicans really don’t like to be reminded of it. But as far as I’m concerned, Democrats are only slightly less bad than Republicans on these critical issues. If the choice is between some ideological pinhead like Tom DeLay — The Wall Street Journal once asked DeLay if there was any regulation on the books he favored retaining and he replied, “I can’t think of one” — and Sen. Joe Lieberman, who has totally sold out to the accounting industry, what’s to choose?
Anyway, the “Litigation Reform Act” (beware anything with tort “reform” in the title) among other things made it harder to sue executives and accountants, lawsuits the corporate world invariably describes as “frivolous.” This is the bill that made accounting firms “sue-proof” for aiding and abetting securities fraud. The bill also made it legal for CEOs to pipe up and lie about their company’s prospects. Until then, executives had to avoid all “forward-looking” public statements about future earnings. Contrast that with Jeffery Skillings of Enron bullying and snookering stock analysts right up to the end.
In the real world, there are only two ways to deal with corporate misbehavior: One is through government regulation and the other is by taking them to court. What has happened over 20 years of free-market proselytizing is that we have dangerously weakened both forms of restraint, first through the craze for “deregulation” and second through endless rounds of “tort reform,” all of which have the effect of cutting off citizens’ access to the courts. By legally bribing politicians with campaign contributions, the corporations have bought themselves immunity from lawsuits on many levels.
For years, corporations have conducted a campaign designed to convince people that trial lawyers are the scum of the earth. Personally, I find trial lawyers as a group to be warm, cuddly and cute as little bugs. But if you wanted to think of them as tigers or sharks, go right ahead. The idea is to have them patrolling corporate behavior, so that whenever a corporation sticks a hand over the legal limit, along comes a tiger and bites it off by suing them for lots of money.
You can imagine what an improving effect this has on corporate behavior. Except “tort reform” has made the tigers an endangered species. We need a new wildlife crusade, “Save the Trial Lawyers.”