The bubble did it. Or so goes the newly fashionable, no-fault explanation for the

cascading corporation scandals now posing a clear danger to the U.S. economy. "The '90s were a period of excess," intones head White House economist Lawrence Lindsay.

Every economic bubble since the Dutch Tulip Mania in the 1600s has been marked by scandal and crime. We were all swept up in the dot.com craze, captured by the desire to get rich quick.

Since we're all implicated, no one is responsible. The market is coming back to Earth; we'll sort out the few "bad apples," the lawbreakers, and move on.

Bull. This bubbleology would allow conservatives to shirk responsibility for what they have wrought. Currently, one conservative, President George W. Bush wants to pose as tough on crime. But he came to office tailoring his rhetoric and administration to fit an anti-government pattern established by Ronald Reagan. He appointed the accountants' lobbyist, Harvey Pitt, to head a "kinder and gentler" SEC. His first SEC budget proposed eliminating 57 staff positions, including 25 in enforcement. His Treasury secretary, Paul O'Neill, immediately shut down international efforts to monitor the offshore corporate tax havens at the heart of Enron's maneuvers.

And, in his belated speech yesterday on corporate responsibility, the president dodged virtually every major needed reform. Bush failed to endorse a ban on auditors consulting the companies they review. He said nothing about remedying the obvious analyst conflicts in major financial houses. And he continues to oppose reforms to curb the executive stock options that CEOs have used to plunder their own companies.

Bush will sign whatever reform legislation emerges from Congress, but he clearly won't fight to make it tough.

It's meaningful that after the "excesses" of the 1920s drove us into the Great Depression, there was no equivalent epidemic of financial and political corruption until the current crime wave. That's because Franklin D. Roosevelt's New Deal put cops on the beat to police corporations and regulate their behavior.

The Securities and Exchange Commission was created in 1934 to review the books. The Glass-Steagall Act of 1933 separated investment houses from commercial banks to end corrosive conflicts of interest. The Federal Trade Commission and the Justice Department limited mergers and monopolies. Unions, then representing some 30 percent of the workforce, made companies more responsible to their workers.

It is no accident that the current wave of costly corporate scandals followed the rise of modern conservatism to political power two decades ago. Reagan governed while denigrating government as "the problem, not the solution." He starved agencies of resources and placed committed ideological opponents in charge of them. His Commerce Department drew up a hit list of regulations resented by business ("the Terrible 20"). And, of course, he signed the law that deregulated the savings-and-loan associations. The resulting infamies cost taxpayers billions.

The conservative assault on government reached fever pitch when Rep. Newt Gingrich led the "perfectionist" caucus of the Republican right to take over Congress. For Gingrich conservatives, government regulation was creeping Stalinism. House Majority leader Dick Armey said that in the New Deal and the Great Society, "you will find, with a difference only in power and nerve, the same sort of person who gave the world its Five Year Plans and Great Leaps Forward - the Soviet and Chinese counterparts."

And it wasn't just rhetoric. "Regulatory agencies have run amok and need to be reformed," said Rep. Tom DeLay of Texas, the House majority whip, as he invited business lobbyists to detail the regulations they wanted gutted.

A centerpiece of Gingrich's Contract With America was "securities reform." Passed in 1995 over President Bill Clinton's veto, the bill shielded outside accountants and law firms from liability for false corporate reporting, and made it more difficult for shareholders to bring suit against fraudulent reporting. A flood of corporate misstatements has followed.

Then there were the compromised auditors of Enron and WorldCom, loathe to risk lucrative consulting fees from the companies they audited. In the 1990s, Clinton's SEC chairman, Arthur Levitt, waged a bitter campaign to ban this basic conflict of interest. The accountants' lobby - led by Pitt - blocked the reforms, with Republicans Billy Tauzin in the House and Phil Gramm in the Senate, joined by several Democrats, threatening to gut the SEC's budget if Levitt went forward.

Meanwhile, investment analysts at Merrill Lynch were rewarded for recommending stocks they considered "junk" to unwary investors. That conflict of interest was a direct result of the 1999 repeal of the Glass-Stegall Act.

The new bubbleology must not distract from what really took place. Markets require rules. We have to do more than lock up a few corrupt corporate executives. We have to clean out the misguided conservative politicians who helped create the conditions in which the corrupt could thrive.

Robert L. Borosage is co-director of the Campaign for America's Future, Washington

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