You know things have really gotten out of hand when the most scathing attacks on corporate greed and Wall Street malfeasance are being launched not by knee-jerk business haters and anti-globalization Jeremiahs but from the glittering towers of corporate America.
Surveying the view from his No. 2 perch on the Forbes 400, Warren Buffett, the Grand Pooh-bah of American Capitalism, opened fire with both barrels this month when he told an audience of over 10,000 Berkshire Hathaway shareholders that Wall Street loves a crook, investment bankers don't care about investors, stock-option-engorged CEOs are shameless, and American business is teeming with fraud. Come on, Warren, tell us how you really feel.
With big business in such a sorry state, what we need more than ever is a courageous crusader at the helm of the Securities and Exchange Commission, someone who will do everything in his power as America's top securities cop to root out corporate corruption and restore the public's trust.
Instead, we have Harvey Pitt, a chairman so ineffectual and compromised that immediately after his commission adopted a set of feeble, industry-generated ethics rules for stock analysts last week, he turned around and said: "One of the questions we must ask ourselves is whether these proposals have teeth and bite." Isn't that a question he should have asked before rubber-stamping the toothless, biteless regulations?
Pitt is the wishy-washiest watchdog since Scooby-Doo.
Now I really hate to say I told you so (actually I don't hate it, I love it. After all, honesty should begin at home), but back in December this column called for Harvey Pitt to resign before the year was out on the grounds that naming a man who had made a career out of butting heads with the SEC as its new chairman was a little like naming Osama bin Laden to run the Office of Homeland Security.
Since then Pitt has done everything in his power to prove me right. He spinelessly coddled his old pals in the accounting industry, allowing them to continue to double-dip as highly-paid consultants, took halfhearted sloppy seconds on the New York attorney general's probe of Wall Street stock shenanigans, and raised the red flag on conflicts of interest by holding meetings with former clients currently under investigation by the SEC.
Forget corporate watchdog, how about corporate lapdog?
Pitt's mishandling of the job comes at the very moment when the average shareholder desperately needs a champion. In a recent letter to his shareholders, Buffett described himself as "disgusted by the situation, so common in the last few years, in which shareholders have suffered billions in losses while the CEOs, promoters and other higher-ups who fathered these disasters have walked away with extraordinary wealth. To their shame, these business leaders view shareholders as patsies, not partners."
Last week, the recognition that the SEC is failing in its "primary mission" to, as its own website boasts, "protect investors," led even the Wall Street Journal and London's Financial Times to finally join this solitary Greek chorus and call for Pitt's ouster.
The Journal ended its biting editorial by deriding the White House's ludicrous claim that Pitt is doing "a great job getting tough on corporate
misconduct": "We doubt," read the editorial, "anyone at the White House really believes that. At least we hope they don't; because no one anywhere else does."
I'm not even sure that Pitt believes it. Indeed, when I saw him 10 days ago at the White House Correspondents' Dinner, I asked him what he thought of the latest wave of corporate misconduct stories. "There is no doubt," he told me with confidence, "that we need to find out if some companies went too far." Find out if some companies went too far? Gee, Harvey, are you sure you want to go out on a limb like that?
Talking to Pitt about corporate greed is a lot like talking to Cardinal Law about pedophile priests. It's crystal clear that these guys just don't get it.
Let's hope that Washington proves more responsive than the Catholic hierarchy. Perhaps the outrage coming from Buffett and the other Holy Fathers of the free-market faith will serve as a wake up call to those charged with cleaning up post-Enron America.
But I wouldn't count on it. It's really not in Harvey Pitt's DNA to even notice the stink wafting up from the corporate sewer, let alone get down into the muck and clean it up.