Re: WorldCom bankruptcy.
The nation's bankruptcy laws should be amended to protect our economy when huge firms such as WorldCom fail due to fraud. When bankruptcy occurs, the shareholders are invariably wiped out, and even the secured investors (bond holders and lenders) receive pennies on the dollar. This is as it should be if shareholders and investors err in evaluating the prospects of a firm. With WorldCom, however, it was impossible to protect investments, as most all who dealt with WorldCom _ including its employees _ were victimized by internal fraud by high-ranking officers of the firm and by the failure of the Arthur Andersen auditors to report clear violations of accepted accounting practices.
Eventually, WorldCom will emerge from bankruptcy rid of its $30-billion in debts, and the medical and pension obligations owed to thousands of its employees. A proportion of these costs will be pushed onto the taxpayer. WorldCom's costs will be lower than those of its competitors who, in turn, may fail due to the increased competition. A wave of bankruptcies will continue the destruction of wealth, the loss of thousands of jobs and an increased burden upon taxpayers for the pensions and medical expenses for these poor souls.
The law should be changed to permit the bankruptcy court to consider the state of competition nationally when huge firms emerge from the protection of the law. Neutral parties _ such as the Justice Department's Anti-Trust Division, the Federal Trade Commission, the Securities and Exchange Commission or the Federal Communications Commission _ could advise the court concerning the state of competition. If appropriate, the firm would emerge from bankruptcy carrying some of its prior obligations.
Congress recently considered legislation that would discourage fraud by barring individuals from wiping out all their credit card debt by declaring bankruptcy. If such a policy could be applied to the little guy, the same principle should also be applied when fraud in the huge firms rears its ugly head.
Nicholas E. Karatinos, Esq., St. Petersburg
New accommodations suggested
Re: Corporate royalty can sneer at their debt, by Mary Jo Melone, July 23.
Corporate royalty should be taken from riches to rags. I commend Mary Jo Melone on her column. There wasn't a wasted word in it nor a bit of untruth. It also represents the feelings, I'm sure, of the majority of Americans at this time.
The mansion, pictured in the July 22 Times (Ex-WorldCom executive's digs: an emblem of excess), that former WorldCom financial officer Scott Sullivan is building in Palm Beach County truly depicts arrogance, unacceptable ignorance and self-centered greed. He builds this outlandish residence in Florida to hide behind its bankruptcy laws, which help shield assets if they are in the form of a residence. By rights, he belongs in Clinton, Miss., living in a 12- by 12-foot cubicle with one sink, one commode and one bunk.
Jack Burlakos, Kenneth City
Debunking the business model
Re: Corporate royalty can sneer at their debt, by Mary Jo Melone.
Pulitzer Prize committee members, are you listening? This outstanding column should be read across the nation. Also, Melone could use the prize money to pay off her credit card debt.
We're told that in 1985 top corporate executives' pay was 70 times their employees' pay, up from 40 times in 1980, the year I retired; and by 2001 it had increased to 410 times. And concurrent with this looting of corporate America, these executives were downsizing hundreds of thousands of people out of their jobs and retirement savings, all the while referring to "right-sizing" their businesses.
Melone refers also to the irony of hearing politicians say that they would run government like a business. As a church leader, I wish I had a dollar for each time I've heard a finance committee member make the same comment about running the church.
The shibboleth that business is a model of efficiency has been debunked. Now we need legislation to reform the business practices that have brought us to this sorry state _ also prosecution of the robber barons.
Joseph H. Francis, St. Petersburg
The problem with those in power
Re: What's wrong with corporate America? July 22.
The headline on the front page of Monday's business section somewhat amuses me. In my opinion, it would be more apropos to ask "What's right with corporate America?" In fact, all I needed to do was read the comments of some local CEOs to find the answer.
To whit, the CEO of Raymond James, apparently, opposes making a majority of outside directors independent. (Perhaps he prefers to interact mostly with good ol' boy "company directors," because they are more understanding / willing / impelled / compelled to work with him?)
Also, the CEO of Tech Data apparently is opposed to a company's outside auditor not doing other business with the company. (Only one year in law school taught me to always be wary of a possible conflict of interest.)
In addition, the CEO of Sykes apparently is against regulating how companies pay their their top executives. I wonder why? Perhaps, being a CEO himself, he would prefer not to "rock the boat," "gravy train" etc.? (After all, why should they not receive total compensation packages many times greater than that of the president of the United States? Aren't they worth it?)
A noted statesman was quoted as saying: "Absolute power corrupts absolutely." In my simplistic way of thinking, it "for dang sure" applies to a lot of corporate America today!
Jos. P. Corell, Safety Harbor
Thinking of Herbert Hoover
Well here we are smack dab in the middle of the great stock market crash of 2002 and President Hoover, er Bush, tells us the economy is good and that he and his staff of former CEOs are working for the good of the American people. I expect a call for greater tax cuts for the rich any time now.
In 1932 President Hoover received a telegram, "Vote for Roosevelt and make it unanimous."
I volunteer to send the telegram in 2004.
Mark Jacobs, Wesley Chapel
Focus on policies for economic growth
Re: Missing a safe course for fiscal policy.
David Broder's excellent July 16 column adequately described the problem, but failed to offer a solution. The most important point he made is in his closing paragraph: "Since Sept. 11, neither Congress nor the president has exerted any real discipline on government spending." How true, especially the bloated farm bill which deserved a presidential veto, but which got kudos instead.
What the ailing economy needs is an immediate dose of more tax cuts, the permanent ending of the death tax and the lowering of the capital gains rate.
The economy is sputtering, we're in the worst bear market in my memory, and the $3-trillion budget surpluses projected last year have morphed into $1-trillion of red ink. How does Congress respond? By debating how hundreds of billions of dollars should now be spent on free prescription drugs for seniors. While I am a senior and am affected by higher drug prices, I think the priorities of Congress and this administration should be on issues that matter to most Americans: economic growth, jobs and the return of the bull stock market.
While President Bush and his cohorts are justly focused on the war on terrorism, they need to expand their views and get back to what got them elected in the first place. Since 1900 no president has been re-elected in a stock market with such poor performance. Republicans must advance more economic growth policies, none of which have been seen since the Bush tax cuts of April 2001.
What President Bush needs to do is to invest some of his 70 percent approval rating in the bully pulpit and to not only defeat the Democrats in their politically motivated maneuvers, but to return the U.S. economy to the 4-5 percent economic growth we have a right to expect.
Sam Lasley, Clearwater
Don't blame President Bush
Frequent articles and cartoons printed in your newspaper blame President Bush for corporate scandals now being exposed and the downturn in the stock market.
In November 2001, the Bush administration's Securities and Exchange Commission, headed by Harvey Pitt, initiated the investigations that exposed accounting corruption begun during the Clinton years and inherited by President Bush.
With the help of Arthur Andersen, Enron started inflating earnings and hiding debt in 1997. Xerox was using "creative" accounting to falsify its earnings back in 1997. WorldCom began to "cook its accounting books" in 1999. In addition, there will probably be more corruption uncovered as the Bush SEC continues to investigate corporate accounting practices that were ignored by the Clinton-era SEC.
Respected CNN financial commentator Lou Dobbs recently observed that had the Clinton SEC in the 1990s cracked down on corporate corruption, "there's a very good chance" the more recent wave of corporate scandals would have been prevented.
Julie Brady, Osprey
Bush and Cheney should come clean
In sixth grade, my inability to spell "hypocrisy" knocked me out of a regional spelling bee. I have since learned both the correct spelling and the depth of meaning of the word.
Most Americans are painfully familiar with the concept. Much of our cynicism and refusal to participate in our republican form of government results from the endless stream of hypocritical dreck that sluices out of our capitols. The most egregious recent example is our president's (and vice president's) humorously hypocritical dudgeon over the theft, fraud and deception that pass for accounting practices and ethical standards in many American businesses. Bush was somewhat candid as a candidate about parts of his past; let him and Cheney come clean on their own stock sale shenanigans if they expect to lead on this issue.
Jon McPhee, St. Petersburg
The details matter
Re: Don't conceal the news, letter, July 18.
The letter writer is critical of the placement of the July 16 article Bush sold Harken stock, despite pledge to hold 6 months on Page 5 of the business section. I want to point out that the pledge was dependent on a public offering that didn't happen! My original concern was that the headline would give headline readers an inaccurate impression. But here we have a reader who ignored the fact that there was no public offering. Placing this atrociously biased headline on Page 1 would have been an even greater miscarriage of journalism.
Stan Dumovich, Spring Hill
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