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The Public Company Accounting Oversight Board, a private watchdog group that was actually created by Congress, has been critical of the large accounting firms for accepting information from their corporate clients and blessing it without doing independent inquiries. The accounting board wants certain reforms, such as requiring companies to rotate their auditors. So a bill was introduced into the House, disingenuously called the "Auditor Integrity and Job Protection Act," that would block the watchdog from instituting reforms. On July 8 it passed the house by an overwhelming 321-62. MapLight, the organization that tracks money given to legislators, reports that interests supporting the bill -- particularly accountants, brokerage houses, and biotech companies -- gave House members a whopping 138 times what opponents (consumer groups, labor unions) gave.

Bottom line: Thanks to Congress, you can probably expect more Enrons. Money talks. Why must it nauseate?

Comments
21

Don, surely rampant greed has (long ago) overtaken this country and will prove to be our undoing. I don't see any way to get a handle on it.

"These are the times that try men's souls." - Thomas Paine 1776

July 11, 2013

Duhbya: Capitalism desperately needs reform. In the 1950s, 1960s and 1970s, the system was not so greed-obsessed, and operated in the interests of the greater population. Companies built for the long term and weren't operating solely to run up their stocks and please Wall Street with quarterly earnings performance. In those days, accounting was reasonably reliable (with the exception of conglomerates), at least for big blue chip companies. Beginning in the 1980s, short-term thinking -- greed -- took over, and was taught in the business schools. It's still true, lamentably. Best, Don Bauder

July 11, 2013

Without commenting on the bill itself, I would point out that the House is controlled by Republicans and that "consumer groups, labor unions" pretty much never ever donate to or support Republicans and, in fact, work hard to maintain an adversarial relationship with Republicans. Big business donors though, do play both sides of the aisle, which is why that bill got a lot of support from House Democrats. I am sure that if you looked at just the Democrats who voted for this, you would find they did quite nicely in terms of donations from the yellow dog liberals controlling unions and other heavily-partisan constituencies. When I worked for elected officials I saw more than once that no matter how a Republican official voted on certain issues, those groups endorsements - and money - would always go to the Democrat opponent at election time. People help their friends when they have a chance, but if someone consistently treats you as a hated enemy you are not going to be kind to their agenda.

July 11, 2013

Bob: I didn't mention either Republicans or Democrats in this blog. Of course, Democrats respond to money, too, and some of them certainly did as this bill passed overwhelmingly. Generally speaking, Congress has frustrated attempts to reform corporate accounting. After Enron, there were some reforms, but almost immediately they were softened. Similarly, after the bank bailouts of 2008 and 2009, the Dodd-Frank bill passed. But it was emasculated by the time it passed -- and even more emasculated later. Unfortunately, Congress has consistently been on the side of accounting that deceives investors. Best, Don Bauder

July 11, 2013

Speaking of congress and corruption, anyone heard anything from former congressman and temporary mayor Filner today?

Vote Frye for San Diego Mayor, let's get it right this time.

July 11, 2013

Except she says she is not interested.

July 11, 2013

There's always the write-in vote.

There have been far too many corrupt mayors (4) in a row selling out San Diego to special interests.

We've got to get San Diego into the 21st century now, there are too many problems that need immediate fixing.

No one has more integrity and experience than Donna, and our future demands the best we have to make the right things happen to produce an acceptable quality of life for our newest and future generations.

July 11, 2013

Again, she said she is not interested. If/when Filner is recalled or resigns, I see a very crowded list of replacement candidates, but unfortunately, I don't see Donna's name among them.

July 11, 2013

aardvark: The names are all downtown corporate welfare captives -- Faulconer, DeMaio, Fletcher, Dumanis, ad nauseam. Best, Don Bauder

July 11, 2013

aardvark: The mayoralty was stolen from her once. She may not want to go through that again. Best, Don Bauder

July 11, 2013

Don: I remember. It's the only time I ever wrote in a candidate's name (and yes, I filled in the bubble).

July 11, 2013

aardvark: I think she basically took herself out of the running by being one of the three denouncing Filner today and calling for his resignation. I agree that she would make an excellent mayor. Best, Don Bauder

July 11, 2013

Anon92107: Filner just came out with an announcement apologizing to the City of San Diego, saying he realizes he has a problem in his relationships with women, and he is getting professional help. Best, Don Bauder

July 11, 2013

"Former Assemblywoman Lori Saldaña says she told the Democratic Party that Filner had physically or verbally harassed six prominent women." as just reported to VOSD. http://voiceofsandiego.org/2013/07/11/ex-legislator-i-warned-democratic-party-about-filner-two-years-ago/

Apparently Don is once again most correct when he says we can't trust either party.

July 11, 2013

Anon92107: Mike Aguirre was sued three times for sexual harassment and the suits never went anywhere. At least, the charges were out in the open. Those suits were allegedly pushed by the downtown corporate welfare boosters. It is interesting this time that Democrats are coming out against a Democrat. Best, Don Bauder

July 11, 2013

It seems like the Dems are fighting about who gets to drive the bus, and who gets thrown under it.

July 11, 2013

aardvark: If Filner goes, no Democrat will get to drive the bus. Best, Don Bauder

July 11, 2013

Back on topic...

Don, if I interpret this story correctly, anyone who owns stock in a publicly traded (and no longer required to be properly audited) company is a fool.

Unless they have inside information.

Anyone without inside data, actual knowledge of how the firm is doing, instead of the guaranteed to be cooked books given the public, will inevitably lose their investment. Meanwhile, those who trade on inside knowledge will benefit from this change in the law.

Is that correct?

After reading the work Matt Taibbi, yourself, and Nassim Taleb (plus several other lessor known contributors to this growing field of evidence), isn't it accurate to say that there is very little reason to have any confidence at all in the markets, where we also know that the quants are myopic, the LIBOR and other trading rates rigged, and front trading is not just endemic, it's sold by Reuters by subscription!

Can it get any worse? Is there any fig leaf of respectability or trust left to perpetuate the illusion any longer? Capitalism no longer exists....this is Kleptocracy.

July 12, 2013

Fred: I can't argue with your points, in the main. Corporate accounting is often phony as a three-dollar bill, although big blue chips still keep fairly straight books. Wall Street is rigged and the Securities and Exchange Commission is controlled by the big Wall Street law firms. But 43% of my portfolio is in blue chip stocks because the extremely easy monetary policy of the Fed and other major central banks makes bonds and cash dead money unless there is a depression. Best, Don Bauder

July 12, 2013

I always find it ironic people complain every time politicians vote themselves a raise in pay or benefits , I think they would work for free for the power and unmentioned "perks"

( see I did not use the words bribes or corruption)

July 13, 2013

Murphyjunk: But we knew what you meant when you said "unmentioned 'perks'." There is another factor: as soon as they retire or are retired from office, they can get a fat job as a lobbyist. Best, Don Bauder

July 13, 2013

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