BY EDWIN E. VINEYARD

Everybody has been angry with the executives of the Wall Street banking and financial interests, whose fiscal foolishness and greed caused the at least a temporary loss of about 45% of the wealth held by individuals, rich and otherwise, in this nation. People are angry enough to do something – except for the Republican leaders in the Congress. While most are demanding recompense, and even criminal prosecution, some Republican politicians are holding back on any meaningful reform correcting the fault in regulation and oversight which allowed shady practices leading to disaster.

Some assertive moves by the president and his administration aside, nothing substantive has yet come from the Congress providing oversight that would prevent the same problems from reoccurring in the future. It has been over a year since all this despicable behavior came to light and almost brought the nation to its financial knees. Who would not want regulations put in place to stop it from happening again?

Obviously Wall Street executives do not want their playhouse supervised. They do not want some of their brainy schemes to fleece unsuspecting investors investigated or stopped. Most of all, they do not want anyone interfering with their lavish system of bonuses and obscene salaries. They are working hard in lobbying those politicians most closely allied traditionally with the business and financial world, who profit most from political contributions from this sector. That would be their Republican friends in Congress, and some Democrats.

Almost everyone in Congress knows there must be greater regulation. The lack of agreement has been about how much. Democrats have favored a thorough overhaul with measures enabling executive authority and commissions such as the SEC to regulate assertively with penalties that bite. Republicans have favored a more gentle form of oversight. There is disagreement also on enabling needed oversight and internal corporate controls of executive compensation.

Democrats are proposing much more direct and effective involvement of stockholders, other than directors in setting limits for executive compensation and controlling bonuses. Perhaps this issue is worth some examination here.

While the wealthy hold huge baskets of corporate stock, and while some corporations are held in majority by a single person or family, vast quantities of stock are held by public or private pension systems, public agency trusts, 401K plans, mutual funds, and individuals at large. The first big questions which loom: Who votes that stock? In whose interest is the stock voted?

The last question is easier to answer. In most instances the stock is NOT necessarily voted with the interests of the individual owner or beneficiary in mind. It is true that trustees and officers of pension systems generally favor interests of their constituency, but their contracted money managers probably do not. Employee members of 401K plans have little or no voice in how their equity holdings are voted, since that is handled by plan managers or the employer. Mutual funds do not offer their share holders voting privileges for their stock equities, and their own fund managers tend to do that. Even equity holdings of eleemosynary foundations normally are not voted by their trustees, but their professional fund managers do so.

Under such circumstances, corporations are rarely accountable to any degree to their actual individual investors. Instead, other professionals within the financial sector are doing much of the voting, setting up all kinds of possibilities for mutually beneficial insider deals and conflicts of interest – none of which are in the stock owner’s favor. This problem needs to be addressed by Congress.

Those readers who do own stock in companies directly will recall the mailings offering opportunities for proxy voting instead of attending a meeting far away. These are quite interesting.

The average stockholder is not ordinarily informed on the voting issues, but a booklet comes with the technical information. Usually the board has taken a position, and the ballot encourages voting their recommendation. Then there is the mandatory one-choice vote to ratify the board’s selection of an accounting firm. And, there’s a vote for board members as listed.

The ballots for election of board members often offer only two options: for and withhold. Interesting enough, the way those votes are counted – a candidate could receive 10,000 “withheld” votes and 100 “for” votes and be elected. “Withheld” simply means that, your vote is held back and not voted at all, so that the candidate still gets the majority of real votes. At regulatory encouragement, some companies are changing the “withheld” to “against.” While that is preferable, it is still almost impossible to defeat a board nominee without some massive, well-coordinated stockholder campaign to wrest back control of the company – often coming from a big owner with his own agenda.

All these are matters which need to be considered in the process of revising regulations for the financial and corporate world, making them more responsive to the public interest and the interest of their stockholders. Otherwise, we will continue to have a corrupt, or potentially corrupt, group of insiders operating the corporate business sector with little accountability to anyone.

Our financial markets, big banks, and financial institutions must be brought back into compliance with honest, open, and ethical business conduct. Other corporations need reform and oversight in the interest of stockholders and the public. Without government intervention there is little that stockholders are powerful enough to do alone in controlling the very companies in which they have investments.

And, we haven’t even spoken of tax dodges, off-shore shell offices, and shipping not only manufacturing but other jobs overseas. Nor have we addressed how to do all this in light of the recent Supreme Court legalizing corporate contributions for issues and political campaigns.

– Dr. Edwin E. Vineyard, AKA The Militant Moderate, lives in Enid, OK and is a regular contributor to The Oklahoma Observer