Telco giant WorldCom has managed to misplace $3.8 billion dollars, which is a hell of a lot of money to just misplace. Already they’ve fired their CFO, accepted the resignation of another, and are preparing for the worst. Of course, until May Arthur Andersen was their auditing firm. (Do we see a pattern emerging here.)
Of course, now we’re going to see another frenzy on Capitol Hill as lawmakers take this as an excuse to create more regulations which will only make the situation worse. Yes, WorldCom screwed up bigtime. Arthur Andersen screwed up even bigger, and they’re no longer in business because of it. But none of those things justifies tinkering with American enterprise by Washington.
The fact is, the market will recover. Already auditing firms are seeing that the handwriting’s on the wall; if they try to cover this kind of gross financial mismanagement, they’re just as dead as the corporations they’re covering for. CEOs are realizing that if they try to pad their nest while their companies crash and burn they’re going to end up as pariahs for the rest of their lives. In short, the market is going to start making some major corrections; corrections that would be good for everyone involved without the need for Congress to get involved in their typically heavy-handed manner.
However, this provides fuel for the Democrats who have a new target for their class warfare rhetoric. Expect both Daschle and Gephardt to be on TV talking about how we need to tighten corporate accountability laws (perhaps not a bad idea) and remove corporate tax breaks (an economy-breaker in a recession.) When many of these laws are passed due to public outrage, the businesses who will get the shaft have no one to blame but themselves.