The Wall Street Journal: Who needs regulation now?


All the while The Wall Street Journal was engaged in its duplicitous pursuit of imaginary regulatory lapses in the Indian gaming industry and purported corruption in the federal recognition process of Indian tribes, its own house was burning to the ground. How apropos that at the heart of Wall Street's troubles lies weak regulatory oversight of public corporations that had devised ways to deceive their communities of investors and transfer, with unmitigated greed, hundreds of millions of dollars to illegitimate corporate aristocracies.

Until recently held up as model of economic efficiency and vigor, Wall Street and what it represents in the world of finance and business is presently in crisis. Always subject to charges of avarice, but generally sustained by the public's trust of corporate accountability, the integrity of American business practice is now under intense scrutiny. Consumer and investor confidence, so crucial to the positive forces of entrepreneurial spirit, is shaken to its core by the growing realization that the system is stacked ? even in its accounting ? against honest, hard-working people. Decent Americans of all backgrounds have been harshly affected, while far too many among the elite class of chief executive officers have thoroughly swindled investors in several previously exalted companies.

Fraudulent accounting practices led the way as large corporations cut a wide swath of destruction through an oblivious landscape. The forest was sick but the trees were prevented from making an accurate diagnosis. As a result, the stock market has taken a serious hit. One after another, major corporations have fallen while exhibiting the same symptoms ? accounting irregularities accompanied by stock option fever. While the deregulation of market forces has been the mantra of Wall Street since the 1980s, the financial system was never properly immunized and was thrown open for one of the biggest epidemics of greed in American history. Revealed has been a very ugly side of the American market system: the completely dismissive attitude toward the common people shown by so many corporate officers and executives.

Not long ago, The Wall Street Journal, a recognized beacon of America's financial and business world, excoriated this paper and by implication the whole movement of American Indian economic recovery and tribal renewal. The attack and its complaints were old and inaccurate derivative fodder spewed from an ideological editorial machine, but we took them seriously enough to set the record straight with accurate reporting and analysis. In that case, driven by theory rather than fact, the Journal claimed that the Indian gaming industry was vulnerable to widespread corruption, including influence by organized crime. It also asserted that the BIA tribal recognition process was chronically subject to the shadowy inducements of political and special interests. Neither is the case.

In reference to the Indian gaming industry it has been shown to be more comprehensively regulated than any other gaming in the United States. Three layers of oversight, federal, state and tribal, keep steady watch over the management activities and practices of tribal gaming operations. They have proven to be highly efficient in identifying and eliminating discrepancies. Findings of the U.S. Justice Department confirm the success and reliability of Indian gaming regulatory structures. Before the Senate Committee on Indian Affairs, Bruce G. Ohr, chief of the Organized Crime and Racketeering Section, concluded: "Indian tribal gaming has proven to be a useful economic development tool for a number of tribes, who utilize gaming income to support a variety of essential services."

In reference to The Wall Street Journal's distortions of the federal tribal recognition process, particularly with respect to the now approved application by the Eastern Pequot, vindication has been achieved on many fronts. The Eastern Pequot, of course, have accomplished the final determination they had been seeking for over 25 years (well before Indian casinos were even on the horizon). In addition, former Interior Assistant Secretary Kevin Gover and his interim successor Michael Anderson, two presidential administrations (one Democrat and one Republican), and Indian Country Today all focussed on the facts while The Wall Street Journal was engaging in a practice they call "opinion making." But isn't that the same problem the market is now experiencing? When "opinion making" is predicated upon misinformation, when credibility is buttressed by fraudulent accountability, will these not eventually fade when confronted by the truth?

During the recent turbulence in the financial markets, the American public showed one thing ? it trusts Indian casinos a heck of a lot more than it trusts Wall Street. While investors dumped stocks by the billions, the betting take in Indian gaming continued to rise. We think the reason is simple. Indian casinos are honest about what they do, which is to meet the market demands of an American public hungry for gaming entertainment and hospitality, and they accept multiple layers of regulation, not only as part of the game, but also out of respect for their industry and for their tribal members. As one historically induced cynic once put it, she had no problem with Indian gaming per se because it exploited "the one trait of the white man we can always count on ? greed."

It can be said that Wall Street at its heart is all about greed, but it constantly tries to cloak its driving motive in rhetoric about "growing the economy." In self-serving distortions of "free-market" theory, it resists government regulation at every turn. Wall Street insiders often talk as if the only regulation they need is the clash of greed against greed, as if the contest between the bulls and the bears is enough to produce market balance.

This might be true for market sophisticates, but the mass of small investors who provide market volume rely on help from the government and supposedly dispassionate professionals like accountants and their personal brokers to get accurate information for their investment decisions. The core of the recent market collapse was the sudden revelation that this information could not be relied on, that the trusted professionals (and the government) were letting exceptionally greedy corporations lie to their investors. Much in the same way The Wall Street Journal misled its readers about Indian gaming and tribal recognition.

One of the technical issues these days involves the way corporations book the stock options granted to senior executives; the current system caters to the greed of management while hiding the cost to stockholders. But the basic problem crops up again and again, regardless of the technical shape it assumes. We saw the same spirit in energy "deregulation" two years ago, the Savings and Loan debacle of the 1980s and countless other burst bubbles throughout the history of market capitalism. The name of the Free Market (an elegant construct in itself) is sometimes used to cover an arrangement that enriches a few insiders at the expense of the general public. Politicians get a cut of the loot in way of campaign contributions, but usually an amazingly small share of the special benefits they unwittingly confer.

The Savings and Loan crisis showed how it works. Crooks got into the thrifts and made heavy political donations so they could go to friendly politicians to call off the government examiners who were raising questions about the plundering that was going on. Some na?ve Reagan-era officials bought the argument that they were taking government off the backs of business. But this wasn't deregulation at all. The federal government was giving the industry a trillion-dollar free ride by insuring its depositors against the loss of an almost unlimited amount of savings. The arrangement gave free-booters billions of dollars for gambling with no penalty for losses, except the eventual jail term.

The accounting profession has argued for self-regulation, saying that the Depression-era stock market reforms provided investors with guarantees of all the information they needed. But corporations pay the accountants' bills, not the public, and gradually the conflict of interest corrupted the flow of information. When Enron and Worldcom awoke the public to the hollowness of the market claims of full disclosure, the stock market paid its spectacular price.

Beyond a certain size, it seems corporations can sometimes lose all actual social accountability, even to their own best people. As at the beginning of the 20th century, there is no compelling reason to believe these corporate personalities will be any less rapacious as the new century gets under way. It took a Theodore Roosevelt campaign to break the powerful grip this type of institution had over the country in those days. In those days the increasingly corrupt and politically tentacled mega-monopolies that had pretended to represent American patriotism while abusing people and destroying all sense of social responsibility were subdivided and severely downsized.

It all raises the need for a new socio-economic program. For American Indians seeking to recover from centuries of dispossession of land and resources, destruction of culture and severe economic deprivation, not to mention all manners of policies that fed American greed, gaming is always best intended as a means to rebuild the nations. The gaming industry has helped to re-empower American Indian communities and fuel the bases of social services necessary to jolt Indian communities out of cyclical poverty. For tribes across the United States, economic and cultural recovery is the primary objective of the gaming option. Many are actively seeking diversification into other economic bases, including a quite impressive range of tourism, manufacturing and other business options. Wall Street Journal editors would do well to learn more about this emerging world.

Indian country can claim the last laugh on its critics in Wall Street. The attacks on Indian casinos relied on exaggerated and even fabricated evidence of wrongdoing, while the defense of the financial markets turned a blind eye to massive conflict of interest and fraud. But the public is now showing that it knows better whom to trust.