In response to the recent string of revelations of accounting and finance scandals and the impact on stock prices, "President" Bush spoke at a Wall Street breakfast, calling for more personal responsibility by managers and members of boards of directors. He said that capitalism only works when investors have confidence in financial statements.
Doc Nagel: Mr. "President," I'd first like to thank you for this opportunity to interview you. It's not every day that the media in this country can ask questions of government officials.
"President" Bush: That's quite alright.
DN: Now I'd like to ask you to clarify in what way the system of capitalism requires investor confidence.
"P"B: Well it works like this. If corporations can't maintain the confidence of investors, the investors will stay away.
DN: You mean, they'll invest in something else?
"P"B: That's right. If they aren't confident about a corporation they won't invest.
DN: Okay, here's one place I'm confused. Where else would they invest? I mean, if they're investors, then they're investing in something, right?
"P"B: That's right. That's what investors do, is invest.
DN: So if they aren't investing in one corporation, they're investing in another?
"P"B: You're gettin' it. Say, you could get into an MBA program if you keep this up!
DN: That's cute, Mr. "President." But let me see if I really understand. If capitalism only works if investors' confidence is maintained, then when investors' confidence isn't maintained, capitalism collapses. Is that right?
"P"B: Capitalism requires investor confidence.
DN: But if they're investing somewhere else, capitalism won't really collapse, will it?
"P"B: Not as long as the investors keep investing.
DN: We could even say the whole scheme rests on confidence, huh?
"P"B: That's it exactly. It's like a scheme to win investor confidence.
DN: Now I think I see what you mean about capitalism and confidence. Maybe we could look at another issue, about the problems that seem to have come up when stock is used to pay executives of corporations. The Senate passed a bill restricting that kind of compensation. Do you support that idea?
"P"B: No, no I don't. Giving stock or paying executives with stock makes the executives have a stake in the company. It gives them an incentive.
DN: Well, that's where I thought the problem was. Bernie Eggers received stock as CEO of Worldcom, and that gave him a strong incentive to increase the stock price - the higher the stock rose, the more he was getting paid.
"P"B: There's nothing wrong with that. It lets people earn more for working harder. That's the American way.
DN: But it also lets people "earn" more by hiding debt from investors so the stock rises.
"P"B: Only when there's abuses. That's why under my plan CEO's would be personally responsible for the financial statements their companies present to investors.
DN: Like you were responsible when you were CEO of Harken Oil?
"P"B: Just like that.
DN: What do you think of the allegations that you sold Harken stock in some kind of insider trading deal?
"P"B: Totally false.
DN: So when you sold 212,000 shares of stock at $4 a share to an unnamed buyer, you had no idea that Harken was in trouble?
"P"B: There's nothing illegal about selling stock.
DN: No, there's not, that's true. But you've got to admit, it's a little fishy. Two months after you sold the stock, Harken was bankrupt. And the market price for the stock when you sold it was around 3 bucks.
"P"B: In private stock deals, you can just try to get the best price.
DN: Wow, you must be a terrific salesman! But is this the kind of thing that hurts investor confidence?
"P"B: How could an example of someone making money on stock hurt investor confidence?
DN: I guess I meant that it might seem to some people that you took advantage of your position as CEO to profit from selling stock just before it became basically worthless. You weren't telling people Harken was making a profit, were you?
"P"B: [Laughing.] Nah, you're talking about Dick Cheney!
DN: Ha ha, Mr. "President," another good one. Although the Vice President still hasn't made many public appearances, he did deny allegations that while he was CEO at Halliburton, the energy trading company did the kind of debt-shielding deals that happened at Enron.
"P"B: Well, Dick would have to answer that himself.
DN: I'd ask him, but he's not available to the public at all, ever since September.
"P"B: Well heck, I'll just call him. [Dials phone number on speakerphone.]
Dick Cheney: Hello?
"P"B: Dick? Dubya. Listen, I've got a guy here who wants to ask you a question, okay?
DC: Mr. President, no one's supposed to know where I am!
"P"B: Oh, right! Sorry, Dick! [Hangs up phone.] You know, subpeonas.
As "President" Bush has reminded us so often in these past months, it's important for us to keep in mind the values that make America great.