No-Account law?(COMMENTARY)

Article excerpt


"No more easy money for corporate criminals," President Bush said as he signed new antifraud legislation. "Just hard time."

Hard time is what John Rigas, founder of Adelphia Communications, and his two sons could face. The three were arrested recently on charges they had looted millions of dollars from the company.

But if they wind up behind bars, it won't be because of the new legislation.

Laws already on the books would have assured that. In fact, the Adelphia arrests, along with a civil lawsuit brought against five executives of that company - all logged before the new law was enacted - prove it's not additional laws we need to curb white-collar crime, but better enforcement of existing laws.

The Rigas case was the third major criminal case brought against business executives this year. Officers from both Tyco International and ImClone had been arrested just weeks earlier. And civil cases had been brought against executives from WorldCom, with criminal charges possible.

With all this action under way before Congress acted, why are lawmakers so proudly trumpeting the new law? It's a typical Washington response to a real or perceived crisis: Instead of ensuring that existing laws are enforced, Congress hurriedly creates an agency. The legislation is rushed through with more of an eye toward garnering good publicity than solving regulatory lapses.

In their zeal to look tough, House and Senate "reformers" even tried to outbid each other. When President Bush called for doubling penalties for white-collar crimes from five to 10 years, the Senate acted within hours.

Not to be outdone, the House doubled those penalties to 20 years. One senator joked that a majority favored simply executing corporate executives.

A much-ballyhooed "achievement" of the new law is a new quasi-government agency to regulate the accounting profession. Although Congress took great pains to call it a private organization, its members will be appointed by the Securities and Exchange Commission (SEC) - a government agency - and it is charged with enforcing securities laws. Congress didn't bother to explain how a "private" organization can enforce laws.

Although hailed by editorial boards nationwide as a major step forward, the new law is unnecessary and unwanted. As the Adelphia prosecutions showed, existing law is quite capable of dealing with corporate crime. …