A Tsunami of Scandal

A rogue's gallery of crooked corporate chieftains, avaricious auditors, bumbling board barons and feckless federal fraud foes has tumbled out of the cascade of business scandals that blacken the image and threaten to sap the vitality of American capitalism. The most well-run casino in the world suddenly looks like a shoddy set-up for suckers.

But there is one more category of miscreants that deserves our attention: the country's protean politicians. Where were they when this was happening? And where are they now that the mess has been exposed, largely by the business cycle, a few crusading state attorneys general and some tough local prosecutors? Where is the populist outrage that would have swept the Capitol even a generation ago, when investment bankers and tycoons were more target than vital source of campaign funds?

Make no mistake: The United States of America as a whole has been let down by Enron, WorldCom, Tyco, ImClone, etc. and the conditions that permitted any of them to rob, cheat and defraud at will. This is not just about a few bad apples, or the hits that unwise investors have taken in a bubble they should have avoided, or Repub-Dem wrangling in Congress. This is about the system -- the ethical and legal sinews of a nation celebrating its 226th birthday.

In the self-enrichment zeitgeist of the 1990s, markets were declared the sole arbiter of economic conditions around the world, both by Bill Clinton and by his GOP detractors. It was easy to lose sight of the traditional role that stock and bond markets -- and the houses of finance built on them -- played for the nation: They financed America's future.

They channeled the citizenry's accumulated savings into national infrastructure, new products and new jobs. They were not slush funds that enabled brigands to buy off the lawyers, auditors and, yes, the politicians, who were supposed to be the public's guardrails.

This wave of scandals grew to its tsunami-like proportion in large part because the professionals working for and with these companies became secret entrepreneurs. They sacrificed the independent judgment they claimed to exercise and joined in the game of stoking short-term stock price increases, regardless of long-term consequences for the company and its shareholders.