Paul Nitze: Guest opinion
September 26, 2008
This is political theater on a grand scale. Two campaigns that have been meticulously stage-managed, particularly the McCain campaign, were pushed out of the pocket last week. They are now scrambling to respond to events over which they have little control. John McCain lobbed a deep ball with his campaign suspension and debate withdrawal, only to see that pass fall incomplete.
Now the nation’s leading craps player has doubled down and is desperately trying to support the bailout just enough to avoid being tagged as an obstructionist. His advisors are surely telling him that he’s in the two-minute drill phase of his campaign, and that if he wants to win this thing, he needs to capitalize on popular anger at the bailout. Calls are flooding into Congressional offices, we’re told, a hundred opposed to the bailout for every one call in favor.
Cynical as their tactics are, the McCain team is hoping against hope that the bailout passes with nominal GOP support. That would allow Steve Schmidt and Rick Davis to fashion last-minute ads tagging the $700 billion package as a classic liberal splurge. A full-throated endorsement of the final bill, whatever form it takes, is the kiss of death for the McCain campaign.
This makes for compelling theater, truly jaw-dropping stuff, but it tells us nothing about our economic future. Instead of a diet rich in historical analogy, insight into the financial markets, and predictions about the long-term consequences of this crisis for our economy, the media has fed us with fast food this week. As a result, the commentariat has missed the forest for the trees.
For all the coverage of voter dissatisfaction, and Main Street is hopping mad right now, the public’s response to the crisis can’t be reduced to the word “no.” There’s a lot more meat to it than that. Typical is a letter published in this paper last weekend, from Allyn Harvey in Carbondale.
I hope the author forgives my paraphrasing, but that letter made three basic points. First, we should be outraged that a small group of people gambled away our savings and our prosperity. In Allyn’s words, “The invisible hand has picked our pockets clean.” Second, angry as we are, let’s hold our noses and pass whatever legislation it takes to get ourselves out of this mess. Third, when the dust settles, we need to hold those who are at fault responsible and fix our system of corporate governance.
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That last point is the one that seems to have gotten lost in the shuffle. Popular anger at the bailout would be at a low simmer, not a boil, if the public had any confidence we’ll punish those responsible for this ocean of bad debt. Quite rightly, many voters think the perps will get away with a slap on the wrist and a short trip to the penalty box.
That’s why my attention this week was directed to a more subdued drama playing out in Denver. I’m talking about Joe Nacchio’s rehearing on appeal before the full Tenth Circuit Court of Appeals. Although that event barely made it below the fold in Friday’s Denver Post, it merits our consideration. And that’s not just because I’m a former clerk for a Tenth Circuit judge (I left before this case came up on appeal).
Many Americans have forgotten that even as we navigate this financial crisis, we’re still sorting out punishment for the corporate fraud that ensued more than five years ago. In case you haven’t followed the tortured path of the Nacchio case, the former Qwest CEO was convicted last year on 19 counts of insider trading and sentenced to six years in prison. A three-judge panel of the Tenth Circuit reversed that conviction earlier this year, holding that a defense expert excluded by the District Court should have been allowed to testify. That decision was itself abated when the full court granted rehearing on the case this summer.
I wasn’t in the courtroom on Thursday for the rehearing, but I was present for the initial appeal. Nacchio’s attorney, an appellate superstar named Maureen Mahoney, absolutely hit the cover off the ball. If there is any single individual responsible for the initial panel decision in the case, it is she. Nevertheless, I was dismayed by the panel decision, because it’s my read of the law that the defense didn’t take the steps necessary to secure their expert’s testimony.
Regardless of the legal intricacies involved, the larger consequence of all this is that justice has been denied to the thousands of Qwest employees who lost their jobs and savings while their boss pocketed over $200 million. And even as some of the biggest fraudsters of five years ago are still behind bars, such as Bernie Ebbers and Jeffrey Skilling, the SEC and the Department of Justice have quietly backed off on their investigations of less public figures.
To those in Congress who are worried about finding political cover in the midst of this bailout mess, they should listen more closely to what their constituents are saying. So far as I can tell, the message is: First, pass the bailout. Next, go after those responsible, and don’t stop until justice is done.
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