[corp-focus] Wall Street Versus America

[robert weissman]

Wall Street Versus America
By Russell Mokhiber and Robert Weissman

There is something about Gary Weiss's new book -- Wall Street Versus
America: The Rampant Greed and Dishonesty that Imperil Your Investments
(Portfolio, 2006).

It's not the same old recitation of corporate and Wall Street crimes
that have bored generations of business school students taking their
required ethics courses.

While it purports to be about Wall Street, it is in fact a biting
critique of the elites that populate the Wall Street firms, regulatory
agencies, law firms and newsrooms across America.

Weiss spent 18 years as a reporter at Business Week, but he never wrote
with this point of view and intensity.

He doesn't much care for New York Attorney General Eliot Spitzer.

Or former Securities and Exchange Commission (SEC) chairman Arthur Levitt.

Or Harvey Pitt.

Or William Donaldson.

Or the class action lawyers.

Or regulation, for that matter.

He despises the fringe microcap fraudsters as much as the more
mainstream hedge fund hooligans and mutual funds rip-off artists with
their excessive and hidden fees.

He sees evil in the one-sided agreements that all investors sign with
their brokers -- the agreements that strip investors of their access to
the courts and shuttle them instead into an arbitration system dominated
by Wall Street veterans.

Read this book.

And keep up with Weiss' current thinking on his web site.
(garyweiss.blogspot.com)

He's on to something that few others in the financial press get.

In fact, he holds his fellow financial journalists in low regard.

"It is the nature of financial journalism to glorify the powerful and
the wealthy," Weiss said. "That's true in all journalism to a great
extent. ... It has to the do with the pressures of the job, the
pressures of advertising, although they are never spoken of as such. It
is the nature of covering a beat where there are a lot of wealthy
people. You tend to be hagiographic. Fear of lawsuits has increasingly
become an issue. It discourages tough reporting. It has become a
background issue. It's never spoken of. No one ever comes out and says
-- we are afraid of lawsuits. It is never spoken. It is always in the
distance. It's background noise. It's part of the culture."

In an interview with Corporate Crime Reporter, Weiss savaged the current
state of corporate crime and punishment.

He says Spitzer is totally motivated by politics -- "He wants to be
President."

He rips Spitzer for not taking on hedge funds -- which fund his
campaigns -- and the Wall Street-dominated arbitration system.  Instead,
he says, Spitzer focuses on "low hanging fruit." He's a hit and run
artiste -- get the headlines, and move on -- to get more headlines. One
big problem with Spitzer -- he doesn't demand that his defendants admit
fault, Weiss says.

He also takes a swipe at former SEC chairman Arthur Levitt.

After leaving office in 2001, Levitt wrote a book -- with former
Business Week reporter and current New York Times business editor Paula
Dwyer -- titled Take on the Street.

"Well, he didn't take on the street when he had the opportunity to do
so," Weiss said.

"In every single issue that he approached, it was always the same,"
Weiss said. "He'd make a big stink. He'd give big speeches. But he
wouldn't actually do anything that impacted on the status quo. He
delivered many speeches on the subject of Wall Street research. But when
he actually had the power to do so, he didn't bring a single case
against a major Wall Street firm involving fraudulent research. That was
when he had the power."

Weiss says that Levitt was portrayed in the media as being tough on Wall
Street.

That's because "everybody in the media loved Arthur Levitt," he said.

"You could get him on the phone," he said. "Levitt had wonderful media
relations. His media relations were always skillful. Everything was
played to the media. He would take a particular action and he would spin
it. He would take these weak-kneed actions and it would be spun in the
financial press as a major victory."

So, for example, Levitt was portrayed in the media as acting decisively
against rogue brokers.

In fact, "Levitt was a disaster on microcap fraud," Weiss said.

On his war against accountants, Business Week portrayed Levitt as the
investor's champion.

"But in fact it was a surrender to the accountants," Weiss said. "It was
not a major victory."

Does Weiss see any difference in SEC actions under former Wall Street
lawyer Harvey Pitt, William Donaldson, or Arthur Levitt?

"No," he says flatly. "It doesn't make any difference. It's just a
question of public relations. Pitt's public relations were awful. He
made no effort to disguise his prejudice in favor of Wall Street. He was
a Wall Street lawyer for many years. What do you expect? He was pummeled
by the media. Then they brought in Donaldson after Pitt self-destructed.
And Donaldson was much more media savvy. He really knew how to play the
press. And he did. He was much more like Levitt in terms of playing the
press."

Gary Weiss has a theory.

He calls it call "the reverse rationality theory of Wall Street crime
and punishment."

It goes like this: Just because something is terrible doesn't mean it
will be punished.  And just because something is being punished doesn't
mean that it is terrible.

He makes the point that the fines and penalties that come out of the SEC
are less painful to the corporate criminals than a parking ticket
outside the SEC's downtown DC building would be to you or me.

And you and I have to check a little box on the back of the ticket.

We have to either admit wrongdoing.

Or deny wrongdoing.

These crooks can routinely "neither admit nor deny" wrongdoing.

They have rigged the system.

And everyone is whistling the same tune.

Except for Gary Weiss.

After 18 years at Business Week, he is free at last to call it as he
sees it.

Wall Street versus America.


Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter, <http://www.corporatecrimereporter.com>. Robert Weissman is
editor of the Washington, D.C.-based Multinational Monitor,
<http://www.multinationalmonitor.org>. Mokhiber and Weissman are
co-authors of On the Rampage: Corporate Predators and the Destruction of
Democracy (Monroe, Maine: Common Courage Press).

(c) Russell Mokhiber and Robert Weissman

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