If you thought that the Enron scandal might prompt Congress to stop playing patsy to wealthy special interests, consider how big money has skewed some of the big Enron "reform" decisions made so far on Capitol Hill:
On April 24, the House voted to make changes in laws governing accounting and financial disclosure, but critics like Consumers Union, the Consumer Federation of America and U.S. Public Interest Research Group argued that the bill that passed 334-90 was little more than a "Ken Lay Protection Act." They pointed out that the bill, sponsored by Rep. Michael Oxley (R-OH), failed to prohibit accounting firms from making millions from selling consulting services to the same companies they audit, and did nothing to close the revolving door between accountants and their clients-problems that were at the core of the Enron-Arthur Andersen scam. The Oxley bill also failed to create a new regulatory board that could oversee audit firms, instead leaving that to the Securities and Exchange Commission (where two of the three current commissioners, including the chair, come straight from the accounting Big Five).
After all the bad press for Enron and Andersen, this lopsided vote can only be explained by one thing: money. The members who voted for the Oxley bill got, on average, $33,150 from the Big Five accounting firms and their trade association from 1989-2001, according to data collected by the Center for Responsive Politics, while the members who voted against it got just $17,332, on average. Of the top 100 recipients of accounting lobby money, only 12 voted against the Oxley bill. By comparison, of the 100 who got the least money from the accounting lobby, 45 voted against. Oxley, by the way, is the #12 career recipient in the House of accounting industry cash, at $121,050.
(To find out how your representative voted, and how much money they got from the accounting lobby, go to http://www.howdarethey.org/news.)
On April 10, by a vote of 50-48, the Senate blocked consideration of an amendment proposed by Dianne Feinstein (D-CA) and backed by the two Senators with the most personal business experience-Jon Corzine (D-NJ) and Peter Fitzgerald (R-IL)-to re-regulate energy derivatives, the complex and murky transactions exploited by Enron in its ill-fated drive to riches. She argued that "by controlling a significant number of energy transactions affecting California and by trading in secret, Enron had the unique ability to manipulate prices and gouge customers," with the result that electricity prices soared in her home state and ten others. Her proposal would have closed the loophole that allowed Enron to hide wholesale prices from buyers and regulators.
But the Senate was in no mood to undo the work of Phil Gramm (R-TX), who had slipped a rider exempting such trading from normal regulatory oversight into an appropriations bill in December 2000. Shockingly, Gramm led the opposition to Feinstein's amendment, telling his colleagues "The entire financial sector-every bank, every securities company, every insurance company-is opposed to this amendment." That sector gave a whopping $300 million to federal candidates and parties in 2000, and another $80 million so far in this cycle, 59% to Republicans.
That's not all. Lobbying by the National Association of Manufacturers and most of the country's big employers (through their American Benefits Council trade group) has stymied any extensive reform of pension plan rules-such as a proposal to require greater diversification of employee stock holding. And so far the House has rejected attempts to bar stock market analysts from owning stock in the companies they track.
So much for protecting energy consumers, small investors and pensioners.
