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:
Weekend Edition
June 24, 2016
Friday - Sunday
John Pilger
A Blow for Peace and Democracy: Why the British Said No to Europe
Pepe Escobar
Goodbye to All That: Why the UK Left the EU
Michael Hudson
Revolts of the Debtors: From Socrates to Ibn Khaldun
Andrew Levine
Summer Spectaculars: Prelude to a Tea Party?
Kshama Sawant
Beyond Bernie: Still Not With Her
Mike Whitney
¡Basta Ya, Brussels! British Voters Reject EU Corporate Slavestate
Tariq Ali
Panic in the House: Brexit as Revolt Against the Political Establishment
Paul Street
Miranda, Obama, and Hamilton: an Orwellian Ménage à Trois for the Neoliberal Age
Ellen Brown
The War on Weed is Winding Down, But Will Monsanto Emerge the Winner?
Gary Leupp
Why God Created the Two-Party System
Conn Hallinan
Brexit Vote: a Very British Affair (But Spain May Rock the Continent)
Ruth Fowler
England, My England
Jeffrey St. Clair
Lines Written on the Occasion of Bernie Sanders’ Announcement of His Intention to Vote for Hillary Clinton
Norman Pollack
Fissures in World Capitalism: the British Vote
Paul Bentley
Mercenary Logic: 12 Dead in Kabul
Binoy Kampmark
Parting Is Such Sweet Joy: Brexit Prevails!
Elliot Sperber
Show Me Your Papers: Supreme Court Legalizes Arbitrary Searches
Jan Oberg
The Brexit Shock: Now It’s All Up in the Air
Nauman Sadiq
Brexit: a Victory for Britain’s Working Class
Brian Cloughley
Murder by Drone: Killing Taxi Drivers in the Name of Freedom
Ramzy Baroud
How Israel Uses Water as a Weapon of War
Brad Evans – Henry Giroux
The Violence of Forgetting
Ben Debney
Homophobia and the Conservative Victim Complex
Margaret Kimberley
The Orlando Massacre and US Foreign Policy
David Rosen
Americans Work Too Long for Too Little
Murray Dobbin
Do We Really Want a War With Russia?
Kathy Kelly
What’s at Stake
Louis Yako
I Have Nothing “Newsworthy” to Report this Week
Pete Dolack
Killing Ourselves With Technology
David Krieger
The 10 Worst Acts of the Nuclear Age
Lamont Lilly
Movement for Black Lives Yields New Targets of the State
Martha Rosenberg
A Hated Industry Fights Back
Robert Fantina
Hillary, Gloria and Jill: a Brief Look at Alternatives
Chris Doyle
No Fireworks: Bicentennial Summer and the Decline of American Ideals
Michael Doliner
Beyond Dangerous: the Politics of Climate
Colin Todhunter
Modi, Monsanto, Bayer and Cargill: Doing Business or Corporate Imperialism?
Steve Church
Brexit: a Rush for the Exits!
Matthew Koehler
Mega Corporation Gobbles Up Slightly Less-Mega Corporation; Chops Jobs to Increase Profits; Blames Enviros. Film at 11.
David Green
Rape Culture, The Hunting Ground, and Amy Goodman: a Critical Perspective
Ed Kemmick
Truckin’: Pro Driver Dispenses Wisdom, Rules of the Road
Alessandro Bianchi
“China Will React if Provoked Again: You Risk the War”: Interview with Andre Vltchek
Christy Rodgers
Biophilia as Extreme Sport
Missy Comley Beattie
At Liberty
Ron Jacobs
Is Everything Permitted?
Cesar Chelala
The Sad Truth About Messi
FacebookTwitterGoogle+RedditEmail