By Maxine Shapiro, KERA 90.1 commentator.
Dallas, TX – It started with Enron, then WorldCom and Global Crossing, and now Waste Management Incorporated. Why this sudden influx of accounting problems by these huge corporations? Though it seems like it all happened overnight. It didn't. I'm Maxine Shapiro with KERA Marketplace Middays.
Unfortunately, like most change, it takes a debacle like Enron to shake things up. Status quo is fine until it doesn't work anymore. The Securities and Exchange Commission, the people that we look to to regulate the conduct of these corporations, to protect the investor, have fallen gravely short of their duties. And now, they're scrambling to make up for lost time.
Where has the SEC been? In truth, patrolling the little guy. See, with an understaffed, under-paid SEC, it's very hard to keep up with the big boys. That takes a lot of time and manpower. Let's say they could audit five or even ten companies in the same time it would take to audit one the size of Enron.
I've worked at a small brokerage house during a National Association of Securities Dealers - NASD - audit. Just so you know where they fall in: the SEC audits the NASD for information. Sorry for all the acronyms. Anyway, the staff at the NASD was eager to find anything worthy of a wrongdoing be it legitimate or not. I got this sense they were out for blood, even if it was just red dye. If we had anything, it would be easy to find. We were just the little guys.
Last month, I told you that President Bush proposed a "zero-growth" budget for the SEC. Somebody must have wakened somebody up, because two weeks ago it was reported that now the President will seek additional funding to add one hundred new staffers to the SEC nationwide - one third of those to the Washington office. According to the Dow Jones Newswire, that's a mere 4% increase in a year that already has seen a 165% rise in financial fraud investigations.
I agree wholeheartedly with Allan Greenspan, who said yesterday that we do not need any new legislation in light of these accounting scandals. But sorry Allan, you're wrong. These companies cannot regulate themselves. For KERA Marketplace Middays, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 P.M.