Capitalism's Best Pals: Liberals

Corporate corruption is a "moral cancer that “is threatening this great system and our economic health." These "sins of omission, malfeasance and misfeasance" are "eroding shareholder value for all corporations and public confidence in critical elements of our economic system." This is a “betrayal of capitalism.

Corporate scourge Ralph Nader? Mirthful muckraker Michael Moore? No, these quotes come from leaders of America's financial community-Pete Peterson, Blackstone Group co-founder and former U.S. Commerce secretary ; John Snow, chairman and CEO of CSX Corp.; and Felix Rohatyn, former Lazard Freres partner. All are calling for rapid, bold institutional and legal reforms to revive investor confidence.

But these financial giants are discovering that if they want to save capitalism from itself, they'll have to rely on liberals to lead the way.

Despite the dire warnings from Wall Street, it is still largely business as usual in Washington. The scandals have merely stirred dozens of industry associations and hundreds of corporations into action to bottle up even watered-down reform. For example, Thomas Donohue, president of the U.S. Chamber of Commerce, issued an "action call" urging opposition to accounting reforms offered by Senate Banking chair Paul Sarbanes. He accused the Maryland senator of a "knee-jerk, politically charged reaction" to the Enron scandal. The American Institute of Certified Public Accountants, which gave $14.7 million in campaign donations to both Democrats and Republicans during the last election cycle, according to Center for Responsive Politics, denounced Sarbanes' reforms as a "de facto government takeover" of the profession.

The Republican majority in the House has been happy to pass legislation pre-approved by the business lobby. In the Senate, Sen. Phil Gramm (R-Texas) has served as de facto administration point person. Congressional Quarterly reported that he urged lobbyists to "stall, stall, stall" to avoid reform legislation. Gramm denies the charge.

The Bush administration's initial response to Enron's bankruptcy was to dismiss it. Treasury Secretary Paul O'Neill said the company's fall was evidence of the "genius" of capitalism. As the scandals have mounted, the administration has acknowledged, in the president's words, "some bad apples" in the corporate world but remains opposed to broad legal reform. Harvey Pitt, chairman of the Securities and Exchange Commission and the administration's lead on the issue, has rejected most of the proposed reforms, such as restrictions on stock options or conflict-of-interest limits on auditors or stock analysts.