A Pause That May Refresh
The Senate Judiciary Committee has postponed a hearing it had scheduled for June 20 on the "Short Selling Activities of Hedge Funds and Independent Analysts." Hopefully the senators will use this pause constructively, as this hearing was shaping up to be a dog and pony show for the benefit of blame-shifting CEOs.
Increasingly, corporate managers who can't run their companies competently have been shifting the blame to short-sellers, who bet on stocks declining. This is actually an old phenomenon, and certainly not the first time that Congress has obediently served as a PR conduit for such scapegoating.
In Wall Street Versus America, I describe how a House hearing on the same subject in 1989 left one congressman -- future SEC chairman Christopher Cox -- wondering something aloud. He asked if the committee hadn't been "snowed" by excuse-mongering CEOs. It had been. The whining CEOs who appeared before the committee came from three companies, two of which were later prosecuted for fraud.
Different era, different side of Capitol Hill, same snow.
Unless, that is, the senators decide to actually investigate something worth investigating.
They may want to use the extra time -- the AP says the hearing is off till the 28th -- to probe the anti-shorting conspiracy campaign, which is pushing a line of baloney in an apparently well-funded propaganda operation.
Or they could probe actual stock fraud. It's still a massive problem, and its practitioners have long cried the loudest about short-selling.
Indeed, the committee might want to devote its scarce time to hear about any actual problem facing the markets. There are a bunch.
However, as usual when Congress confronts subjects involving Corporate America, money talks -- and the clout of corporate interests is talking in favor of the bogus anti-shorting campaign. As I pointed out in Salon a few weeks back, its aim is to shift the blame from poor corporate performance to amorphous outside malefactors -- them.
The "them defense" was used unsuccessfully by the Enron defendants, and it is sweeping the nation. Next stop: Capitol Hill.
© 2006 Gary Weiss. All rights reserved.
Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site. T