Jewish World Review Feb. 14, 2003 / 12 Adar I, 5763
Corzine throws down gauntlet on Wall St. fraud
The new swing voters in America - this year's equivalent of the Soccer Moms of the
'90s - are the small investors whose life savings hang in the balance as the stock
market tanks. President Bush hopes to appeal to them through his dividend tax cut,
which Democrats stupidly oppose. But now the Democrats are unveiling a strategy
of their own to lure these key voters.
The strategy became apparent when Sen. Jon Corzine (D-N.J.), of all people, closely
questioned William Donaldson, Bush's nominee to head the Securities and Exchange
Commission (SEC). Corzine, a former Wall Street investment banker, demanded to
know what Donaldson planned to do to reform the stacked arbitration process to
which small investors must appeal to get their life savings back after Wall Street
fraud has taken it away.
Noting that, according to the General Accounting Office, 64 percent of arbitration
awards in securities cases go unpaid, Corzine asked what Donaldson was planning to
do to restore the confidence of small investors who have been swindled by Wall Street
con artists. The New Jersey senator signaled future Democratic focus on the
arbitrators who sit in judgment when small investors try to get their money back.
" Have you considered," he asked Donaldson, "… the issue of securities arbitration
where representatives from the exchanges and generally lawyers that are close to
the industry are basically the arbitrators, where the proceedings are secret,
whether there is the kind of fair review of individual investor's response … ?"
Donaldson pledged to review the arbitration process, but, unless he changes it, the
issue is likely to grow and bite Bush and the GOP. As securities lawyer Robert Weiss
puts it, "Investors have no chance before arbitration panels. The process is filled with
industry lawyers and arbitrators with conflicts of interest."
Until now, investors who lost their retirement money because of overestimates of
earnings and phony profit statements, have not come face-to-face with the
arbitration process that will adjudicate the fate of their savings. It's likely that most
expect their day in court. Imagine their surprise when they find that they have
signed away their right to impartial jury trials and, instead, must seek redress in a
biased forum without benefit of discovery, subpoena power, or right of appeal.
So far, Bush has preserved his reputation for fairness in dealing with securities fraud
issues. But as the number of aggrieved investors who are demanding their money
back reaches into the high six figures - and maybe into the millions - he must
propose reform to keep his credibility with those who are part of his normal white
male capitalist constituency.
For Corzine, his willingness to use his inside knowledge of Wall Street for the public's
benefit should send a chilling message to industry insiders. Perhaps Corzine will
become a latter-day Joseph P. Kennedy, the first SEC chairman, by using his
information about where the bones are buried in the public's interest. He's off to an
This year will be a Republican year. Dominated by the likely military action
looming in Iraq, focused on the need to facedown North Korea without panicking the
dictator whose finger is probably on the nuclear button, and obsessed with the need
to protect our homeland, the American public will back Bush fully and completely.
But when 2004 comes, Bush may lose the traction that international crisis is giving
him. He may run out of countries.
Then, issues like the fair treatment of small investors whose 401k(s) are depleted
through fraud and deceit, may again become important. Recognizing this issue,
Bush wisely aimed his tax cut squarely at this community of aggrieved investors.
But will the SEC and the securities arbitration process cost him the votes his tax cut
seeks to garner?
Enjoy this writer's work? Why not sign-up for the daily JWR update. It's free. Just click here.
JWR contributor Dick Morris is the author of, among others, "Power Plays: Top 20 Winning and Losing Strategies of History's Great Political Leaders" Comment by clicking here.
02/12/03: An exile deal for Saddam
02/07/03: The Dems give up the House
02/05/03: France: Saddam's ally
02/03/03: War critics will suffer
02/30/03: Even by Clinton standards, it's sheer chutzpah
01/24/03: Rebirth of the balanced budget Republican
01/22/03: Next to Bubba, Dubya's got it good
01/16/03: End racism in affirmative action
01/13/03: The new swing voter
01/10/03: Political e-mailing comes of age
01/07/03: In Dem race: Home field no advantage
12/31/02: Hey, Hillary: Want to appear like a stateswomyn? Stay silent
12/19/02: Kerry in the lead
12/19/02: Lieberman the frontrunner
12/17/02: In defense of Lott
12/02/02: An issue for Bush: Drugs
11/27/02: Women gone wobbly?
11/25/02: The U.N. over a barrel
11/15/02: Gore's suicide
11/15/02 One-party control is an illusion
11/13/02 The House of Extremes
11/08/02 I have egg on my face
11/01/02 Is Bush losing control over events?
10/25/02What is causing Bush's free fall?
10/25/02: Anybody sense a trend?
10/23/02: A deadline for Iraq
10/18/02: Only sure bet of 2002 elections is voter angst
10/16/02: Endangered incumbents
10/11/02: Why multilateralism doesn't work
10/09/02: Hey, Dems: Believe NYTimes polling at your own risk
10/03/02: Dem suicide: Let's count the ways
09/30/02: The Dems just can't stop themselves
09/26/02: The perils of polling
09/19/02: W. boxed in the U.N.
09/19/02: Welfare reform: Keep on keeping on
09/12/02: Are Dems insane on Iraq?
09/09/02: Twin shadows of Election '02
09/05/02: GOP should triangulate
08/28/02: Trust the military
08/22/02: It's not the economy, stupid
08/09/02: As America unites, Gore goes divisive
08/01/02: Bush must focus on big picture
07/23/02: Election 2002: Advantage Dems
07/19/02: Rudy for SEC tough cop
07/17/02: The investor strike
07/15/02: Door open for drug testing students --- go for it, GOP!
07/12/02: Dubya looking out for No. 1?
07/03/02: The DNA war for Bush's soul
06/21/02: Why are conservatives winning?
06/19/02: Learning to love the feds
06/14/02: Hey, journalists and Dems: Dubya is doing just fine
06/12/02: It's terrorism, stupid!
06/10/02: Sanctions are a potent weapon
06/04/02: Al Qaeda's more dangerous new front
05/31/02: Why '04 looks tough for liberal Dems
05/24/02: Democratic self-destruction
05/22/02: The Clinton failures
05/15/02: Pataki positioned to win
05/08/02: A wakeup-call for American Jewry
05/03/02: Give Bush back his focus
05/01/02: Immigration fault li(n)es
04/25/02: It's the war, stupid
04/17/02: Bush goes small bore
04/12/02: Bush must be a gentle partisan
04/10/02: In defense of polling
04/08/02: Focus on Iraq, not the Palestinians
04/01/02: Only Internet will bring real campaign finance reform
03/27/02: Where W's drawn a line in the sand
03/22/02: Enron scandal will not trigger a wave of economic populism
03/20/02: Term-limited --- by war
03/15/02: Europe doesn't have a clue
03/11/02: Bush popularity = GOP win?
03/01/02: Will America be forced to chase its tail in its war on terrorism?
02/27/02: The Arafat/Saddam equilibrium must be destroyed
02/21/02: Campaign finance reform won't hurt GOPers
02/13/02: Dodd scurries for cover
02/11/02: U.S. 'unilateralism'? The Europeans don't have a case
02/06/02: WAR: What women want
02/01/02: They all talk in the end
01/30/01: The odd couple: Chris Dodd and Arthur Andersen
01/22/01: His father's son? Bush better get an 'Act II' fast!
01/18/01: Dubya & the 'vision thing'
01/14/01: The Rumsfeld Doctrine
01/03/01: A President Gore would have been a disaster
01/03/02: Clinton's priority: Political correctness over fighting terror
12/27/01: Terror network grew out of Clinton's inaction, despite warnings
12/24/01: Call 'em back, George
12/18/01: What Bush did right
12/13/01: Libs worry too much
12/11/01: "Open Sesame": Feinstein's proposed bill allows 100,000 non-immigrant students from anti-American countries to our shores
12/07/01: The non-partisan president
12/05/01: Both parties are phony on stimulus debate
11/29/01: When terrorists can enter legally, it's time to change the laws
11/21/01: Go for the jugular!
11/16/01: You are all incumbents
11/14/01: Clinton's failure to mobilize America to confront foreign terror after the 1993 attack led directly to 9-11 disaster
11/12/01: To the generals: Don't worry about losing support
11/08/01: The death of the white liberal
11/07/01: Our leaders are being transformed in a way unprecedented in post-World War II history
© 2002, Dick Morris