Scandals keep many wary of Wall St.
Lingering distrust in financial system could hurt Bush in presidential campaign
Financial advisor Glenda Beach plays with her daughter Olivia in a State Farm office in Kennett, Mo. She says her clients often worry that the bigwigs could take all my money and run off with it. (David Kennedy / For the Times)
"It's one of the things we talk about," said Privett, an accountant in this small town near the Arkansas and Tennessee borders. "Has anybody heard anything? Do we know who runs this company? Have they had problems in the past? Have there been any accusations?"
A few blocks away, insurance agent and financial adviser Glenda Beach hears the refrain over and over from clients who want a safe place to nurture their hard-earned savings. Every day, another customer frets that "the bigwigs could take all my money and run off with it," she said.
Factory worker Ron Hicks can't figure out how his retirement account, tied to stock investments, evaporated in recent years. "Where did the money go?" he demands. "Who's got it? Can you tell me? It's got to be somewhere."
More than two years after Enron Corp. became an emblem of corporate fraud and trickery, opinion surveys show that throughout the nation, the public's faith in the financial system remains shaken — a distrust that undermines people's sense of financial security and helps fuel a hunger for leadership that will set things right.
This unease could prove a factor in the presidential election because it ties directly into voters' concerns about the economy in a year that has seen stagnant job growth and the stock market sinking again.
Democrats, led by presidential hopeful John Kerry, complain that major corporations have lost their civic moorings — cheating stockholders, short-changing employees, shipping jobs overseas — and they blast the Bush administration for being too cozy with rich executives.
Campaigning in Iowa in January, for example, Kerry promised to "break the grip" of corporate interests on government and "drive the forces of greed and privilege from the precincts and pinnacles of power."
For its part, the White House has worked vigorously to insulate itself from criticism, through anti-fraud enforcement, regulatory actions and statements of concern. Yet there are at least some signs that the scandals could take a political toll.
In January, a Wall Street Journal/NBC News Poll found that voters believed Democrats would be better than Republicans at "strengthening laws against corporate corruption" by a margin of 39 percent to 23 percent (with the rest mostly undecided).
"I think the administration has protected itself as much as it can" from being tarred by the scandals on Wall Street and elsewhere in corporate America, said Lawrence R. Jacobs, a political scientist at the University of Minnesota, noting Bush's visible support for enforcement actions. But the backdrop of financial misdeeds, Jacobs added, "is kind of a noxious gas in the air that the administration can't really get out from underneath."
Martha, Homer, David
Indeed, the notions of finance and foul play are linked as never before in popular culture, from the media circus surrounding Martha Stewart's trial to "The Simpsons" television show, where federal agents recently hauled Homer Simpson to jail for stock fraud. Singer David Crosby even composed an anti-Enron anthem that declares: "They want it all, they want it now, they want to get it and they don't care how."
In this month alone, the wave of financial scandal stories has been unrelenting — Martha Stewart's conviction for lying to investigators about her stock trading, the indictment of former WorldCom Chief Executive Bernard J. Ebbers, a $675 million settlement by Bank of America Corp. and FleetBoston Financial Corp. for mutual fund trading abuses and the trial of two Tyco Corp. executives for allegedly looting more than $600 million from shareholders.
In one recent public opinion poll, 74 percent of those surveyed described the image of big companies as "not good" or "terrible."
"Collectively and individually, corporate reputations are declining — a decline that stems from a lack of trust," said Joy Marie Sever, senior vice president at Harris Interactive, which conducted the February survey with the Reputation Institute, a private research organization.
The view back home
The backlash to scandal is not immediately obvious in Kennett, a town of 11,200 in the Missouri "Bootheel," which dips southward between Arkansas and Tennessee. This is farm country — pancake-flat turf bristling with cotton, soy, corn, rice and melons.
High-level financial chicanery seems out of place in this close-knit community where families bump into each other at the Sonic burger drive-in and swap news over coffee at Cuff & McCormicks. It seems just about everybody knows Kennett's most famous native, singer Sheryl Crow.