An avid reader contributed this story:
Remember David Stockman, Reagan’s Director of OMB? He is under indictment for securities fraud, for allegedly talking up his auto-parts company and misrepresenting its financial position just before it went bankrupt.
Is this indictment an example of strict policing of the securities markets? or is it revenge best eaten cold, and a shot across the bow to would-be Republican whistleblowers?
Stockman was tasked with cutting spending during the first Reagan administration. He is the guy responsible for “ketchup is a vegetable.” The thing about Stockman is that he REALLY MEANT IT about spending cuts. So when Reagan’s keepers informed Stockman the biggest budget items were off limits (defense, military pensions, Social Security, etc.), Stockman got pissed, and he blew the whistle – loud. Stockman embarrassed the Reagan administration first with a candid-till-it-hurts interview with William Greider, published in the Atlantic Monthly as The Education of David Stockman, then with repeated Senate testimony describing how the Reagan budget was not serious about cutting spending to match the tax cuts. Stockman was personally chewed out by Reagan in the famous “trip to the woodshed,” but survived until he resigned after Reagan’s re-election, and then wrote a tell-all book. Stockman derisively coined the phrase starve-the-beast to describe Grover Norquist’s dream of killing social spending by maxing out the nation’s credit card. Most famous was Stockman’s charge that supply-side/trickle down economics was simply a money-grab by the wealthy; a “Trojan Horse” to introduce top-down tax cuts.
I don’t know the merits of the current case. I suppose Stockman could be guilty as charged – but it sounds fishy.
A determined prosecutor could find some fault in almost any executive attempting to steer a company away from bankruptcy. And that’s exactly what Stockman ran into – a determined prosecutor. The case was brought by none other than uber-Bushie Michael J. Garcia, US Attorney for the Southern District of New York – who just happens to be next in line of DOJ succession after Gonzalez.
Is Bush sending a warning message to insiders who are now being pressured to spill the beans? Paul O’Neill better watch his back.