FacebookTwitterGoogle+RedditEmail

The Politics of Focus Groups

by SALVADOR PERALTA

“First of all, you know, size of protest, it’s like deciding, well, I’m going to decide policy based upon a focus group. The role of a leader is to decide policy based upon the security — in this case, the security of the people.”

With those words George Bush dismissed the largest single day of anti-war protests in human history.

Let’s dispense with the notion that politicians don’t base policy on the opinions of focus groups and protests. You can bet, for example, that Bush, at some point, will be listening to some of the attendees at the $2,000 per plate focus group he met for lunch in Portland last week and at his fundraiser in Karl Rove’s hometown of St. Louis this week.

And while the Bush administration is currently focussed on peddling, not making policy right now, policy decisions were being made while protesters were on the march last February.

On that day, President Bush was swearing in William H. Donaldson as the new head of the Securities and Exchange Commission. Donaldson’s predecessor at the SEC, Harvey Pitt, had engaged in a wide-ranging investigation of several major investment houses, and the administration wanted him out. Too combative, the Administation said.

Perhaps Pitt was not listening to the right focus group.

Under Pitt’s leadership, the SEC uncovered several disturbing patterns of behavior that included some firms accepting millions in fees for their analysts to promote companies such as Enron and WorldCom, companies whose stocks later tanked on reports of sleight-of-hand accounting and other chicanery.

The SEC also found that major investment houses were involved in creating the internet bubble by underwriting initial public offerings, having their analysts recommend their own IPO stocks, and then dumping the shares owned by the house onto unsuspecting investors. Out of 22 Goldman-led IPOs that were given to executives, eight gained at least 173 per cent on the first day of trading.

Alternately, they used the IPO cash cow to generate additional fees for their services. Over a one year period, Credit Suisse First Boston allocated shares of IPO stock to more that 100 customers who were willing to funnel between 33 and 65 percent of the profit made on the IPO back to CSFB in the form of excessive brokerage commissions.

Less than month after Donaldson took charge of the SEC, he announced a settlement in which 10 of the nation’s largest investment banking firms were fined a total of $1.43 Billion with fines ranging from $80 million to $400 million per firm. Senator Richard Shelby, the ranking member of the Senate Banking and Urban Affairs committee praised the SEC for its handling of the case:

“Securities firms and investors alike should be aware that the Exchange and the other regulators will take all necessary measures to ensure the integrity of the marketplace and to hold responsible any firm or individual who breaks the rules or violates the law.”

On the same day that the SEC fine was announced, the stock valuation of the four publicly held companies on the SEC hit list closed at an increase by $1 – $4 per share. Over the last 3 months, their values have increased by 15 – 23 percent across the board.

Some punishment.

These 10 Wall Street firms had netted more than $90 billion in profit, and millions in personal investment for their executives. The big punishment was a fine that totalled less than 2 percent of their profit.

At what cost were these profits made?

Since 2000, the U.S. economy has lost 3 million jobs, many of them in the high tech sector that was hardest hit when the internet bubble burst. During that span, foreign investment in U.S. companies has dropped by $290 billion while U.S investment in overseas companies has increased by a similar margin.

All of which begs the question: Why would the Bush administration replace an SEC chairman responsible for bringing corporate criminals who had done such damage to the economy to justice, and replace him with someone who settled, giving them a slap on the wrist?

In a word: Influence.

Of the ten companies that were fined by the SEC, five of them are among the President’s top 10 soft money campaign contributors in the upcoming election. Eight of the ten companies join Enron on Bush’s top 20 all-time list of soft money campaign contributors.

Fine (MM)

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

Weekend Edition
May 26, 2017
Friday - Sunday
Anthony DiMaggio
Swamp Politics, Trump Style: “Russiagate” Diverts From the Real White House Scandals
Paul Street
It’s Not Gonna Be Okay: the Nauseating Nothingness of Neoliberal Capitalist and Professional Class Politics
Jeffrey St. Clair
The ICEmen Cometh
Pete Dolack
Why Pence Might be Even Worse Than Trump
Mark Ashwill
The Fat Lady Finally Sings: Bob Kerrey Quietly Resigns from Fulbright University Vietnam Leadership Position
John Davis
Beyond Hope
Ralph Nader
The Left/Right Challenge to the Failed “War on Drugs”
Traci Yoder
Free Speech on Campus: a Critical Analysis
Dave Lindorff
Beware the Supporter Scorned: Upstate New York Trump Voters Hit Hard in President’s Proposed 2018 Budget
Daniel Read
“Sickening Cowardice”: Now More Than Ever, Britain’s Theresa May Must be Held to Account on the Plight of Yemen’s Children
Ana Portnoy
Before the Gates: Puerto Rico’s First Bankruptcy Trial
M. Reza Behnam
Rethinking Iran’s Terrorism Designation
Brian Cloughley
Ukraine and the NATO Military Alliance
Josh Hoxie
Pain as a Policy Choice
Ramzy Baroud
Fear as an Obstacle to Peace: Why Are Israelis So Afraid?
Kathleen Wallace
The Bilious Incongruity of Trump’s Toilet
Seth Sandronsky
Temping Now
Alan Barber – Dean Baker
Blue Collar Blues: Manufacturing Falls in Indiana, Ohio and Pennsylvania in April
Jill Richardson
Saving America’s Great Places
Richard Lawless
Are Credit Rating Agencies America’s Secret Fifth Column?
Murray Dobbin
The NDP’s Singh and Ashton: Flash Versus Vision
Rev. John Dear
A Call to Mobilize the Nation Over the Next 18 Months
Charles R. Larson
Review: Mary V. Dearborn’s “Ernest Hemingway”
May 25, 2017
Jennifer Matsui
The Rise of the Alt-Center
Michael Hudson
Another Housing Bubble?
Robert Fisk
Trump Meets the New Leader of the Secular World, Pope Francis
John Laforge
Draft Treaty Banning Nuclear Weapons Unveiled
Benjamin Dangl
Trump’s Budget Expands War on the Backs of America’s Poor
Alice Donovan
US-Led Air Strikes Killed Record Number of Civilians in Syria
Andrew Moss
The Meaning of Trump’s Wall
Leslie Scott
Trump in the Middle East: New Ideas, Old Politics
George Wuerthner
Environmental Groups as Climate Deniers
Pauline Murphy
The Irish Dead: Fighting Fascism in Spain, 1937
Brian Trautman
Veterans on the March
Eric Sommer
Trumps Attack on Social Spending Escalates Long-term Massive Robbery of American Work
Binoy Kampmark
Twenty-Seven Hours: Donald Trump in Israel
Christian Hillegas
Trump’s Islamophobia: the Persistence of Orientalism in Western Rhetoric and Media
Michael J. Sainato
Russiagate: Clintonites Spread the Weiner Conspiracy
Walter Clemens
What the President Could Learn from Our Shih-Tzu Eddie
May 24, 2017
Paul Street
Beyond Neoliberal Identity Politics
Daniel Read
Powder Keg: Manchester Terror Attack Could Lead to Yet Another Resurgence in Nationalist Hate
Robert Fisk
When Peace is a Commodity: Trump in the Middle East
Kenneth Surin
The UK’s Epochal Election
Jeff Berg
Lessons From a Modern Greek Tragedy
Steve Cooper
A Concrete Agenda for Progressives
FacebookTwitterGoogle+RedditEmail