quasi-pundit,
barstool philosopher,
backseat driver
but never a Monday morning quarterback
email:
adrag1 at msn.com [until the QP server gets fixed]
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Independent Gay Forum


Town Hall: Conservative News and Information - The Conservative Movement Starts Here

Accounting For Options

Tony Adragna

I'm of mixed feeling on the issue. I think comapnies should be required to expense options, but I'm not so sure that congress' solution is correct.

First, the senate bill would not have any impact on rules governing financial accounting -- those are set by FASB (which I think is a joke). What the bill would have done was make a change to tax law so that companies would not be able to deduct those expenses in their tax filings unless they booked those expenses.

Seems fair, right?

Problem is, how do you value those options when you expense them? Current accounting rules allow you to either report nothing, or report the "fair value" at issuance. But, the actual expense to the company is really the difference between option price and full value at the time the option is exercised

And what happens if the option is never exercised? Well, then there isn't any actual expense to the company.

I'd like to see FASB (or whoever replaces FASB) use a rule that requires booking the expense at time of exercise, and the tax accounting deduction would be in that same tax year on the actual expense.

Sen. McCain has the right idea, but the wrong approach. For that reason, the senate was correct, as in 97, to defeat the measure.

[ Above is a reproduction of my comment on Atrios' July 13 9:26AM blog entry]

posted by Anonymous at 1:09 PM | permalink | "The Refuge"

Is He "Tainted"?

Tony Adragna

I wouldn't go so far as to say that anybody is ever irredeemably "tainted", Will. But, Mr. Bush did open the door on issues that go beyond whether or not conduct is legal.

Mr. Bush's defenders have gone so far as to say that the problem is due to lax moral standards during the Clinton years, but Mr. Bush's ethical lapses happened while his own father was president. Mr. Bush talks about personal responsibility and moral clarity, while at the same time he shirks personal responsibility for his late filings and defends Harken's accounting confusion (which I believe was a deliberate act) as something that happened in a gray area.

You know, Will, this isn't the first instance that I've taken Mr. Bush to task over The Disconnect between his rhetoric of morally clarity and his practical moral relativism. For me it's all about practice what you preach and don't even think about preaching something you aren't willing to practice. It is fair for me to recall Mr. Bush's past, since I've been arguing for some time that the talk of moral clarity isn't, and never was, sincere.

That's my beef with Mr. Bush, not his past ethical lapses per se.

posted by Anonymous at 12:16 PM | permalink | "The Refuge"

QP Saturday

Will Vehrs

The first anniversary of Caption Contest has come and gone. Dodd seemed pleased with the response and that's all that matters when one is so heavily invested in a labor of love. I still say his streak of now 53 consecutive contests is an "Ironman" feat. Even Instantman is going on vacation--again.

I thought the anniversary contest was a tough one. I refused to fall into the trap that snared "Rags": "I got nothing." I was even rooting around in the Bible for material, I was so desperate. Where was Dan and JulieC and the mysterious Susan Hogan, though? Ray, come back to the contest, all is forgiven!

Tony, I never got into the Chavez semantics argument, but it sounds like you got it right. I'm not so sure you're even close on your Bush piece, below.

Look, I wish Bush had been a fabulously successful businessman who never had a question mark around his behavior. He wasn't. I wish he would candidly admit that what he did, while the norm at the time and even more the norm as the 90's roared, was wrong.
Of course, if he did that, he wouldn't get points for candor; all the Bush-bashers would just say, "Finally!" and "I told you so."

What you and everyone else seems to be saying is that Bush is forever tainted by his behavior as a private citizen long ago (I acknowledge that he probably traded heavily on his father's connections; most offspring do). Where does that take us? Should the president recuse himself? A President has to look out for the good of the whole country, not his own narrow interests, past or future. Reasonable people can disagree on the President's vision of the "good," but you can't take the President out of the argument. And it certainly is odd that we don't cut the President some slack on the position he was in 12 years ago, trying to make a buck, versus the position he's in now, trying to steer the country through this rocky period. It is possible for someone to grow in their understanding.

I don't think you understood my question of a few days ago. Why do we accept John McCain as the standard bearer for campaign finance reform when he was involved in the Keating Five and took (and still takes) tons of money? Why wasn't he forever tainted? He came around to a new view. By the same token, the President shouldn't be tainted with his past involvement in loans and stock options, barring high crimes and misdemeanors.
posted by Will Vehrs at 7:28 AM | permalink | "The Refuge"

Chavez Is A Dictator

Tony Adragna

Just thought I'd throw my nickle into this pot..

Certainly he was elected -- after first being unsuccessful at an attempted coup d'etat in 1992.

After his election, Chavez stripped Congress of its powers, suspended 190 members of the judiciary, then pushed a new constitution through an assembly 95% controlled by his own party.

Sure, he's a friend of los pobres, he might even fit the description of a benevolent dictator -- those are the ones to be most wary of.

posted by Anonymous at 11:31 PM | permalink | "The Refuge"

President Bush and the Ethics of Personal Responsibility

Tony Adragna

Reading over the President's speech on Wall Street , it's become even clearer to me that he was speaking about more than just proposals addressing unquestionably illegal activity. That being true, then Mr. Bush's prior conduct as a businessman is relevant to the current discusssion notwithstanding the fact that the conduct may have been legal.

Mr. Bush was adamant in his message to Wall Street on the issue of reward for failure:

[Shareholders] should demand that compensation committees reward long-term success, not failure.

Looking over Mr. Bush performance as a businessman it's difficult to conclude anything other than the fact that he was consistently rewarded for failure:

1983 - Mr. Bush's very first company, Bush Exploration -- originally Arbusto Energy ("arbusto" being Spanish for "bush") -- was rescued by Spectrum 7 Energy Corporation, and Mr. Bush was rewarded with the position of CEO.

1986 - After taking $400,000 losses (doesn't seem like much, but Spectrum was a small business with only 15 employees), Spectrum was bought by Harken Energy. Mr. Bush recieved a half million dollars worth of Harken stock and a seat on the board of directors.

[Update: On Harken's accounting problems, it's also fair to note that Mr. Bush was on the board's Audit Committee at the time, and Harken's auditor was Arthur Andersen & Co.]

In neither case was there anything suggesting that the failures were due to malfeasance -- oil prices fell, and that hurt his business. But, there was failure, and there were rewards.

It's difficult to square that history with the current rhetoric of personal responsibility -- either CEOs are personally responsible, at all times and under every circumstance, for the performance of their companies, or we can relieve CEOs of responsibility where the failure wasn't the CEO's fault.

It's also undeniable that the '89 sale of Harken stock was questionable, despite the fact that the SEC turned up no evidence of illegal insider trading. If it wasn't questionable, then why the need for an SEC investigation?

But, there was a technical violation of the law in non-timely compliance with reporting rules in at least four instances. To dismiss the late reporting as irrelevant -- because Mr. Bush did properly file required submissions prior to the sale, and because late filings are only prosecuted in the most egregious instances -- misses the point that there was clearly a violation of law.

The only way that the "irrelevancy" argument makes sense is if you engage in moral relativism -- i.e. Sure it was a violation, but some violations are OK depending on all of the factors.. I have no problem with "moral relativism", but the President supposedly does.

And why can't Mr. Bush admit personal responsibility for the late filings? So far he has blamed the error on his lawyers for not submitting the reports in a timely manner, and the SEC for losing the reports somewhere in its office. Wasn't Mr. Bush personally responsible for ensuring compliant SEC filings related to sales of is own stock?

The answer is -- Yes. Mr. Bush's avoidance of personal responsibility on this matter doesn't square with his corporate responsibility rhetoric.

To dismiss, as Robert Novak (who I respect) does, this whole line of debate as "partisan politics" takes a fair bit of disingenuousness. Rather than sticking to the issue of corporate fraud and other illegal activity, Mr. Bush made personal responsibility and moral clarity part of the political debate -- whether Mr. Bush can pass his own test is a fair question.


posted by Anonymous at 5:11 PM | permalink | "The Refuge"

Gray Ink On Gray Paper

Tony Adragna

I've been ruminating the Prez's "corporate responsibility" speech, and I'm still not quite sure exactly what he said.

What's meant by "corporate responsibility"? I'm quite sure that Mr. Bush was talking about the responsibility of management and directors to shareholders of publicly traded companies. But, Mr. Bush's message included verbiage that made it sound an awful lot like he was talking about being the "good corporate citizen" [ just so there's no confusion, I'm not quoting Mr. Bush: I don't remeber if he said those exact words ] -- that's a much broader language that we liberals use in complaining about corporate excesses in general rather than specific instances of corporate crime.

If Mr. Bush was limiting his comments to prosecuting criminal activity, then what's the point of the morality rhetoric? I don't think there's any disagreement from the left that what's "fraud" isn't relative -- if there is, I haven't heard it.

What I heard Mr. Bush say was something akin to what the anti-globos are saying: companies must bring their behavior into line with our national values. Define "national values" for me? A lot of grayness there.

Yes, moral relativism! Can't get around it in the broader context. But, is the question even relevant to what we're seeing in the scandals?

Look, the subject of professional ethics isn't really all that susceptible to relativism: just ask doctors, lawyers, & CPAs -- they all have fairly clear black & white standards of conduct (I'm not sure about doctors, but I know that lawyers and CPAs are required to periodically take ethics refreshers). Both large financial services firms I worked for -- Citbank and Deloitte & Touche -- required all employees to comply with precise ethics codes.

Don't most large companies require at least corporate officers to abide some published (for internal use) standard of business ethics?

The real question isn't about "moral relativism" in general -- the wrong behavior in these scandals are violations of clear rules. And where the conduct is illegal, it ought be prosecuted -- that's a no-brainer.

There are some not so clear rules that businesses are expected to follow. Some of those rules can maybe be made less subject to dispute over whether the conduct actually (technically) violated the rule -- i.e. transactions where the legality turns on things like "legitmate business purpose" (where the tax court has come to some pretty funny decisions going both ways), or in the case of The Big Four, audit and accounting standards that allow too much interpretation.

What I'm pretty sure we can't do is legislate morality into businesses practices any more than we can legislate morality into individuals. What we can and should do is what the president did yesterday -- call on individuals to act responsbily.

But, that's not enough: we need to keep our eyes open to what the corporatecritters are doing. Prosecution may be a deterrent, but I've got an even better one for 'ya -- the cop on the beat. That means the dirty R word -- Regulation.


Addendum: I really can't see how the ethical lapses are due to moral relativism being taught in our colleges:

Ebbers was graduated from Mississippi College, "the oldest institution of higher education in Mississippi and the second oldest Baptist institution in the world."

Ken Lay was graduated from University of Missouri - Columbia, where "responsibility requires careful reflection on one's moral obligations."

Jeff Skilling was graduated from Southern Methodist University and recieved his MBA from Harvard.

Kozlowski was graduated from Seton Hall University

None of those schools are especially "liberal" -- indeed, it seems that the opposite is true: they lean toward traditional values and moral clarity -- things conservatives find comforting.

Addendum II: BTW, Will, the Prez didn't get out in front with the speech yesterday: he couldn't get in front of Senate Dems who offered a much tougher package, but worse than that, he couldn't even get in front of Senate Republicans who supported the Sarbanes bill and Leahy amendment. The only person Mr. Bush got in front was himself -- I still haven't heard how he reconciles the call for moral clarity with the greyness he spoke about vis a vis that 13 year old piece of pie doing the old acid reflux thing on him


posted by Anonymous at 9:35 PM | permalink | "The Refuge"

A QP Milestone

Tony Adragna

Hey, Will, sometime during the day we broached the 100,000 mark.

Thanks to all of our loyal readers!!!
posted by Anonymous at 9:23 PM | permalink | "The Refuge"

A Cynic's Manifesto

Tony Adragna

They're all lying til otherwise proven!

If I remember correctly, that's a paraphrase of Ben Bradlee's approach to the utterances of public officials. Bradlee believes that lying is "The most serious threat" to freedom of the press, and by extension a threat to our right to know what's going on.

I was once such a naif that I gave everybody "the benefit", but I've seen and heard too much of what I call The Disconnect. "Homey don't play 'dat!" game anymore...

Sure, Will, I'll reserve judgement. But, I'm wanting proof...

More Moran

Right, Moran will come out the other side of the grinder whole, but not unscathed. This isn't the first time that Moran has gotten very generous loan terms -- 'twas the WaPo that caught him that time, too. Even if he loses some support, though, he's still safe in his seat: he took 63% of the vote in his last race where the closest challenger -- the GOP candidate -- only got to 34%...

Bas a bala

Didja get a kick out of my references to the baseball books? I own a copy of Yogi's book --- damned good stuff (the man's a sage). I've gotta get me a copy of Scooter's book, too. Don't know that I want to read Whitey Ford's book -- it's all about baseball...

BTW, I was prompted to write that little bit last night after seeing Scooter, Yogi, and Whitey sitting at the table with Tim Russert. I'm not surprised that Yogi got his friend's to show up this time -- the place is so popular because everybody goes there...

Bush Doctrine

I've been thinking about that speech that just about everybody has commented on: was it too weak; just right; ...?

I think it would make a fine Doctrine... OH, wait a minute, it is. Am I just stupid, or hasn't U.S. foreign policy always supposedly ("ostensibly" some would say) had as an element promoting democracy.

We don't need a new doctrine -- we need somebody to actively pursue policies that flow from such a doctrine. Pushing for democratic reform in the PA is a good place to start. But, I can't wait til we go after the Butcher of Baghdad.

Maybe we can fix a few other places in the area while we've got troops there...

[ OK, that last line is a bit of wishful thinking...]


Long overdue Honor

No comment needed from me -- Humbert Roque Versace speaks for himself through his life and sacrifice.

Why I don't live in DC

They've got money for this?

Countering "liberal bias"

Dickey went way too far: the editor shouldn't have resigned -- he shoulda wrote an editorial and forced the publisher's hand.

Two very funny items

I like those home improvement shows -- been watching This Old House since '89. I've always wondered what the homeowners do to survive during renovation -- if you're as curious as me, this oughta cure 'ya.

The best thing I read today, though, was a "cheeky essay 'bout airlines -- a MUST READ!


Addendum: I'll hafta get back to you on the WorldCom hearing -- I'll try to catch the replay on C-Span tonight. On the specific question 'bout the Fifth -- I think it's a general rule that once you get into the matter and start answering questions, then it's too late to invoke the shield. If he did answer some questions on point, then refused to answer other related questions, I think that's "contempt".

On whether auditing is a fraud -- I'm telling 'ya, I've seen those knuckleheads in action. The really big firms derive most of their fees from selling clients on ideas for accounting in ways that aren't quite illegal, but definitely push the envelope. I don't think Andersen did anything as outright as telling the client to engage in that illegal bit of bookkeeping, but I find it very difficult to believe that the error wasn't found, and that there wasn't some attempt to find a way to justify it.

You already know how I feel about Harvey: he was the accounting industry's attack dog -- Pit[t] bull? -- and I don't think he shoulda been confirmed. Qualified for the job? Yes, but eminently unsuitable because of the conflict...

McCain and Daschle are simply in character, as are everybody else expresssing shock over all the nastiness going on while their portfolios were soaring.

Thank God I never put any of my money in the market -- I lost nothing and I get to sincerely decry what a clusterf*** the whole damnable mess is.



posted by Anonymous at 8:55 PM | permalink | "The Refuge"

WorldCom Spectacle

Will Vehrs

Tony, I've just watched the NBC and PBS treatment of the WorldCom hearings today. I'm interested in your take and the take of any readers who might still post to The Refuge ....

Was Bernie Ebbers in contempt of Congress for his comments around his invocation of the Fifth Amendment? I liked something someone said on NPR--"the Fifth Amendment is a shield, not a sword." On the one hand, I enjoy a witness giving as good as he gets from the camera-hogging, hectoring Congresspersons. On the other, a witness either refuses to testify at all or takes all questions.

In auditing a fraud or what? If Andersen was just accepting all the WorldCom numbers, why pull down such enormous fee? I know, I know, it's about statistical testing, but if statistics can't find one bogus expense among $3.8 billion, something is wrong. Are Andersen former employees still moaning that they got a raw deal because of a few "bad apples?" Jeesh, every corporate scandal has Andersen's name all over it. It wasn't just the Houston/Enron Andersen branch.

Aren't guys like McCain and Daschle a little quick with the hook on Harvey Pitt? President Bush had a good point when he said that Pitt was confirmed unanimously by the Senate. He fell apart that quickly The wheels of justice turn slowly--it may take a long time for cases to be investigated and brought. We ought to be wary of quick fixes promised by new legislation or regulations. We're just starting to see what a mess we've got with the hastily passed Federalization of airport screeners.
posted by Will Vehrs at 8:09 PM | permalink | "The Refuge"

Idiotic Activity

Will Vehrs

Tony, a baseball strike wouldn't be unpatriotic. It would be stupid. The sport is dying and a strike will put it into terminal repose. The same impulse--greed--that has eaten through the fabric of American business has done the same thing to baseball owners and players.

Ok, Tony, if the issue is trust, then trust must be earned. We can't just assume, as the Democrats do, that Bush won't or can't do anything about this scandal because he's been pro-business. We have to listen to his speech tomorrow and see if he makes substantive recommendations and follows through. If he doesn't, then we can draw a line from a stock sale 12 years to a stance that protects the same dubious practices, something the Democrats are gleefully doing way too prematurely.

I loved Lou Dobbs on This Week yesterday, incredulous that DNC Chairman Terry McAuliffe, of all people, would criticize Bush's Harken Energy stock sale. You couldn't pay the transaction fees for McAuliffe's Global Crossing stock sales with the proceeds from Bush's sale.

I agree that the Moran scandal doesn't look good, but as a Democrat, he has a better chance of riding it out.
posted by Will Vehrs at 5:21 PM | permalink | "The Refuge"

Un-American Activity

Tony Adragna

O Holy Cow! The Few and Chosen have Come to a Fork in the Road.

Hey, Will, if baseball is the "National Pastime", then would you consider the impending strike an unpatriotic act on the part of the players? Sure, the players have a right to look out for their economic interests, but hows about a little bit of sacrifice.

Jonah Goldberg says, "They're a bunch of spoiled brats, and they should just play ball"

Donna Brazile hit closer to the mark, "They struck out with me years ago." My sentiment, exactly...

[both quotes from Wolf Blitzer's "Final Round" - Donna Brazile also offered, in response to a question to the panel from Wolf, her thoughts on a perfect gift to Mr. Bush: She would give him everything Mr. Clinton left him with - a good econmy, sound market, budget surpluses...]

"You want the truth. YOU WANT THE TRUTH!..."

Come on, Will. You know that it's not really about the "dubious" 12 year old sale per se. The issue is one of trust, and too many questions about this administration's cozziness with business have been raised for them to be simply sloughed off by Ari. Indeed, the more that Ari asserts that there's nothing there, the more I become convinced of the opposite. Is there something about that twelve year old transaction that raises doubts about Mr. Bush's sincereity vis a vis the corporate scandal?

And, lets not forget about the whole controversy surrounding the energy policy -- contrary to many assertions, those discussions with industry reps may very well have had impact on pending agency actions, not just long term policy goals.

Sure, Congress is taking money from business with both fists. Can we point to anything showing that the relationships might not be what the principles assert them to be?

Stay tuned to the Moran scandal -- doesn't look good...

posted by Anonymous at 9:53 PM | permalink | "The Refuge"

Punditwatch Rates the Fireworks

Will Vehrs

Today's Punditwatch has been posted. Lou Dobbs, Arthur Leavitt, and Billy Tauzin provided some late July 4th fireworks, but otherwise, a David Brooks dig at Karenna Schiff Gore and some bashing of the elderly by Novak and O'Bierne is as good as it gets.
posted by Will Vehrs at 2:30 PM | permalink | "The Refuge"

One Question

Will Vehrs

This question occurred to me while watching the Sunday shows. Why do so many people have no problem with politicians supporting McCain-Feingold while continuing their unbroken string of collecting soft money, while maintaining that President Bush, 12 years from a dubious stock sale, is tainted if he supports rules limiting that same type of stock trading?
posted by Will Vehrs at 12:56 PM | permalink | "The Refuge"