STREET SMARTS

The old Merchants' Exchange, where George W. Bush delivered his big speech on corporate malfeasance last Tuesday morning, "was considered one of the 'most costly and pretentious' buildings within the United States when it opened in 1842." That's according to a brochure put out by the Regent Wall Street Hotel, which now uses the trading hall of the old Exchange as its grand ballroom. Awaiting President Bush's arrival there, many in the crowd of politicians, lawyers, business executives, and reporters could be seen gawking at the colonnaded marble magnificence around them. But the most striking object in the room was a blue screen that had been set up as background for the cameras. On it was emblazoned the phrase "Corporate Responsibility"—not once but something like fifty times. It was as if a stern schoolteacher had ordered some naughty boy to write it on the chalkboard, over and over again.

The afternoon before, the President had looked a very naughty boy indeed. At a press conference in the White House briefing room, most of the questions had touched on the corporate crime wave, and half of those had concerned a questionable business deal of Bush's own: in 1990, when he was a director of the Harken Energy Corporation and a member of its audit committee, he sold more than eight hundred thousand dollars' worth of Harken stock, not long before the share price started heading south, and neglected to file the relevant disclosure form until eight months after the legal deadline. The President answered these questions by saying that the Securities and Exchange Commission had "fully looked into" the matter—a formula he resorted to a half dozen times, on one occasion appearing to allude wittily to Gertrude Stein. (After pointing out that political opponents had long tried to use the incident against him, he quipped, "But nothing has changed. And the nothing that changed was the fact that this was fully looked into by the S.E.C., and there's no 'there' there.")

At the Regent Wall Street the next morning, he handled the preliminaries with affable aplomb. But the text itself he read in a joyless monotone, without inflection or conviction. The remedies he outlined were the feeblest he could afford to offer. He made no mention of such obvious steps as making corporations count stock options as an expense and preventing accounting firms from doubling as consultants to companies they audit. Some of his proposals (like requiring that a dishonest executive be convicted in criminal court before being barred from future service as an officer or a director of a public company) were weaker versions of measures that have been recommended by the S.E.C.'s professional staff or that are currently being rushed through Congress. Others (like calling for annual reports to describe a C.E.O.'s "compensation package" in plain English) are purely voluntary and therefore close to meaningless. The main emphasis was on tougher—or tougher-sounding—enforcement, notably a new "financial crimes SWAT team," an additional hundred million dollars for the S.E.C., and more prison time for wire and mail fraud. Even in this there was less than met the ear. The SWAT team will be essentially an information clearing house, and will involve no new net resources. The extra hundred million for the S.E.C. may be more than the increase that was called for in the President's last budget (i.e., zero), but it's barely a third of what Senate Democrats are proposing. And longer jail terms are beside the point, given the difficulty of obtaining criminal convictions in complex financial cases. The Administration's approach to financial crimes is like its approach to crimes committed with guns: make a show of calling for severe penalties after the fact, but don't bother trying to take away the tools of the criminal's trade.