There was news on Enron the other day --- Tim Belden, the Enron
trader who plead guilty to fraud in the California energy markets, is
now apparently naming co-conspirators not just among his higher-ups at
Enron, but at other companies as well. Rumors are circulating that
Enron's erstwhile competitor Dynergy dumped both its energy trading
business and its trading-savvy CEO to stay one step ahead of the
Justice Department, and prosecutors are now dropping
of a conspiracy so vast that Patrick Ruffini
and Jane Galt
may yet be embarrassed by it.
So, that's what the Justice Department is doing about corporate
fraud, after the fact. What about the SEC, which is supposed to keep
it from happening? Things were bad, scandals happened, heads must
roll, and prominent heads too. And the head that will roll off the
cherry wood guillotine, into its woven wicker basket, is Martha
Stewart's. The SEC's investigation into her insider trading on
ImClone stock has reached a
fever pitch, and even if there are no criminal complaints, the SEC
is still very likely to force her to step down from her post as head
of Martha Stewart Living Omnimedia.
Yet for some reason, the press just keeps looking for bad things to
say about the agency. Its head, Harvey Pitt, is in the thick of
things, having done work for latter-day SEC target AOL, and may have been
personally involved in some of the deals now under investigation.
Which has resulted in, perhaps, some tittering comment, especially
since he initially denied having worked for AOL at all. But he's
still copacetic, viewing the recent $200 million cut in his agency's
budget with equanimity. And he's not about to let a little thing like
that shame him into, say, reinstating the job offer he made to John
Biggs, who was going to head a new accounting review and investigatory
board until it became clear that Biggs actually wanted to review and
These bagatelles have led to carping criticism of Pitt's
stewardship of the agency, which is surely undeserved. Because its
important business is still going forward. Martha Stewart will be
brought down. So the people who really run corporate America will
have their cover, and the public will have its scapegoat. That's a
Besides, she was a pushy, showy arriviste, and nobody in the
Hamptons really liked her anyway.
To be pedantically precise, what actually happened
to the SEC budget was
a reduction in the scheduled increase, which the administration boosted earlier this year to great fanfare, then cut back to nearly
nothing much more quietly, when they thought no one was looking.
If a reduction in a scheduled tax cut is a tax increase --- as Republicans
preach to the skies anytime anyone proposes altering the bulk of the
Bush tax cuts which are not yet in effect --- than a reduction in a
scheduled budget increase is a budget cut.
Some links via Atrios.