Wednesday, October 19, 2011

Rachel Maddow talks about the Good Old Days when Enron was the worst financial crisis..

Last week Rachel Maddow had an insightful piece about big bank swindlers, the Occupy Wall Street and Bank Transfer Day activism movements, and had Barney Frank on to talk about the Dodd-Frank bill.  Last night she had another piece about the recent history of massive swindles of the American population, focusing on the Enron scandal which should have sunk the Bush43 Presidency, and the later the 2008 financial system collapse.  The cause of both of these problems directly stem from deregulation of the banking and finance system, allowing these institutions to cook the books, make fraudulent transactions, and essentially swindle the population.  The response to those problems was to create two regulatory systems, the Dodd-Frank law and the Sarbanes-Oxley law.  The current crowd of Republican Presidential Candidates want to undo those laws, repeal them, in effect returning the country to the regulatory system that allowed the Enron collapse and the later general financial system collapse of 2007-8-9.

Under the old system Rachel talks us through a deal between Blockbuster Video and a large energy company who wanted to launch a joint venture with Blockbuster related to online video streaming and sharing.  That deal eventually fell through at a loss of $113 million, but that large energy company didn't record it on their books as a loss.  That company, Enron, recorded the $113 million as income and was part of the larger cook-the-books fraud committed by Enron.

Enron was a major supporter of the Republican party, to the extent of lending GW Bush the use of their corporate jet during his 1999-2000 Presidential campaign.  Enron was also in the room during Cheney's secret energy policy planning in early 2001.

Basically Enron was propped up by accounting tricks in a charade of lies and shell companies.  Later in the 2007-8-9 financial system collapse we had a different set of companies running a massive charade of lies, accounting tricks, etc, eventually defrauding the American public of massive quantities of money.

But the Republicans want to undo the modest regulatory stuff that came into being after these problems.  So that these kind of problems can happen again?

Let's be real - the actions of these fraudulent were enabled by decades of deregulation.  I can't imagine that Dodd-Frank or Sarbanes-Oxley did very much to recreate the necessary regulatory structure required for an honest and open financial and business climate.  As Barney Frank said during the prior episode, if the population had been calling loudly enough for tough financial reform, then Dodd-Frank could have done much more.

There have been decades of deregulation and I can't imagine that the Republicans are the only culprits here.  Both Democrats and Republicans have been taking payola from the major corporations for decades.

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