[Sorry, the video for this story has expired, but you can still read the transcript below. ]
JIM LEHRER: Now the chairman and the ranking member of the Senate Government Affairs Committee, Senator Joe Lieberman, Democrat of Connecticut, and Senator Fred Thompson, Republican of Tennessee.
They’re here to talk about two issues: their hearings on the Enron collapse coming later this month and their just completed week long visit to Afghanistan and neighboring countries.
SEN. JOSEPH LIEBERMAN: Glad to be here, Jim.
JIM LEHRER: Senator Lieberman, there was a suggestion in The New York Times analysis piece yesterday that the ultimate cause of Enron’s collapse was a culture of greed and arrogance, are they right?
SEN. JOSEPH LIEBERMAN: There’s certainly, Jim, enough in what we know about Enron’s collapse to justify that – that contention; it was not only greed and arrogance, it seems to have been deception — that entities were set up to hide debt that otherwise would have been reported on Enron’s books.
The stock was being touted by executives of the company, while they, in fact, were selling theirs and average stockholders were holding on and in the process of losing their life’s savings, so this was a really shocking and unsettling scandal in which greed and arrogance, deception and fraud and maybe criminal behavior was all involved.
JIM LEHRER: Basically what you know about it thus far, Senator Thompson, what is it that troubles you the most?
SEN. FRED THOMPSON: Well, I don’t know. It’s kind of like the perfect financial storm, I guess. It seems like so many things came together at the same time and the house of cards fell. I think you had an industry there that very few people understood.
I think you had a lax accounting standard that allowed them to book revenues that were… That certainly needed some analysis because they don’t reflect reality. Therefore, the stock price that came out of that didn’t really reflect reality. Then you had pushing the envelope by some people inside the company, past that even. Then you had some people who should be the watchdogs who were apparently not on the job and probably….
JIM LEHRER: You mean government watchdogs.
SEN. FRED THOMPSON: Well, not only that but auditors -
JIM LEHRER: Auditors…
SEN. FRED THOMPSON: — and others perhaps. And so when certain things were held back and not disclosed apparently, so when those things were disclosed, the house of cards came tumbling down and you have, you know, what we’ve seen.
You know, the question that I think a lot of people have is our fragile is our system? How fragile are these major companies? It’s the seventh largest company in the country. And if this can happen to rapidly to a company like that, how many others out there are there?
JIM LEHRER: Senator Lieberman, Arthur Levitt, the former – immediate former head of the Securities and Exchange Commission suggested that that may be the most serious problem here because the whole marketing system is based on numbers. The public must have faith in those numbers that these corporations give out or there ain’t no market system. Is he right?
SEN. JOSEPH LIEBERMAN: Yeah, he is right. Remember, we’ve gone through a remarkable transformation where more and more average people own stock. It’s somewhat over 60 percent of the American people now in one way or another own stock. And most of us are not sophisticated investors.
We rely on auditors, on the boards of directors, on the analysts on Wall Street — all of whom let the rest of us down to terrible consequences for thousands of employees of Enron, retirees and just plain investors who lost their life savings as a result.
So the market is so important that one of the things we’ve got to do as we go back and look at this mess and pick it apart is to ask, what should change to make sure that nothing like this ever happens again?
And, you know, one of the underlying questions here is, how did the analysts who now admit to interviewers, the Wall Street analysts, that they actually never understood the Enron’s books but the company seemed to be making money so the stock kept going up and so they continued to tout it?
How could they do that? And what can we do to stop them from doing that in the future?
JIM LEHRER: Is that going to be the thrust of your investigation? Is it picking through the bones and finding out what happened or is it to have some major new legislation, some major new watchdog mechanisms put in place? What do you foresee?
SEN. FRED THOMPSON: I think it really gets down to the question, I think as Joe alluded to, as to whether or not it’s a matter of the system or whether it’s a matter of individuals gaming the system or maybe violating the law.
You can never devise a system that’s going to protect you from individuals who push the envelope or violate the law. That’s why we have courthouses in every state in the union. The question is whether or not we go to the Congress or we go to the courthouse, depending on the nature of the… the fundamental nature of the problem. Maybe both. Maybe both.
Joe as chairman, of course, set up these hearings. He better addresses this question than me. But we’ve talked about it. And I think we’re going to look at it from a broader perspective, an institutional perspective, and see how… primarily how the government institutions perform throughout all this, but I’m sure we’ll get into some other things too.
JIM LEHRER: One of the other issues, Senator Lieberman, obviously is the campaign contributions that Enron has given. In fact they gave you $2,000 in 1994… What did they buy for that $2,000?
SEN. JOSEPH LIEBERMAN: Nothing.
JIM LEHRER: Why did they give it to you?
SEN. JOSEPH LIEBERMAN: You have to ask them. I suppose people give you something because they think you’re doing a good job or in the case of some people because they want to be able to have access to you at some point. But it’s up to you what they bought.
That was $2,000 out of about $5 million that I had to raise that year. So I don’t feel at all affected by it.
But you know what this all does show, Jim, is that this is a company obviously whose business relied in some sense on government regulation or lack of regulation. They were giving to everybody — not everybody but all around in both parties — and it puts a taint, a cloud over all of us in government.
If there’s no other reaction to the Enron– and there ought to be a lot of reactions — one is that a few more people, members of the House of Representatives ought to sign that discharge petition to get the campaign finance reform bill on to the House floor and get it adopted and send it back to the Senate. That would be one of the greatest….
SEN. FRED THOMPSON: Can I address that? It’s not a matter of $2,000. I didn’t happen to get any but it was for the grace of God. If they had sent it to me, I would have taken it.
It’s a matter of the millions of dollars that’s in the system. I mean we’ve got a system now where large corporations and large unions give millions of dollars and it’s sloshing around in the system.
And the problem with that is that every problem that comes up in the economy or with companies and so forth becomes a bribery investigation. Every problem becomes a potential scandal. The first question we ask is who got the money and how much, the implication being is that who’s been bribed?
And that’s not the way it ought to be. I mean, the average person shouldn’t be having to look at that every time a problem arises and as long as those kinds of monies are around there– and they’re fairly new to our system. It’s not like God ordained this. As long as that situation is there, it’s going to be a scandal waiting to happen and it’s debilitating to us as an institution as Congress and to our political system as a whole.
JIM LEHRER: You could almost pick any corporation the size of Enron out of the air and something similar happened to it and if you went back you would find that they also had contributed large sums of money to all kinds of people.
SEN. FRED THOMPSON: It’s making it so that companies can’t have legitimate redress with their government.
Why shouldn’t a company be able to call up a government and talk over things with them? So now that they can’t do that if they’ve made one of these tremendous contributions….
SEN. JOSEPH LIEBERMAN: I would say, Jim, that probably Enron was more involved than most corporations. It was its policy I think because it interacted with government in a lot of ways.
That’s just a fact because they obviously gave a lot to President Bush, that stimulates a lot of the media and public interest.
JIM LEHRER: One of the points that was made today was that one of the reasons that the Bush administration did not act in any way whatsoever was because they had taken so much money from the… from Enron that they were afraid they would be accused of…
Does that make sense to you? I mean is that another factor in all of this stuff, that the evilness of money….
SEN. JOSEPH LIEBERMAN: In an odd way I remember saying to somebody once who happened to be a friend of mine, gee, if you ever want me to help, you don’t give me any money because I’ll hesitate, because somebody will say you did it because he gave you….
SEN. FRED THOMPSON: It’s not the evilness of money. It’s the tremendous large sums of money that are now….
SEN. JOSEPH LIEBERMAN: We’re talking about soft money. That’s what Fred is talking about that and he’s right.
The post-Watergate campaign finance laws said you couldn’t receive more than $2,000 in a whole election cycle from an individual for your campaign.
SEN. FRED THOMPSON: Which is too low I think.
SEN. JOSEPH LIEBERMAN: And then came soft money and corporations, labor unions, individuals started to give hundreds of thousands of dollars. That’s the big loophole that the campaign finance reform bill would close, and Enron was giving a lot of soft money, unregulated, unlimited to both parties.
JIM LEHRER: Are you confident, Senator Thompson, that you all can get to the bottom of Enron? Is there any reason… Anything that you say, oh, my goodness, we’ll never figure this one out? Is the public going to eventually know exactly what happened?
SEN. FRED THOMPSON: Yeah, there are too many people that play here and there are too many chances, I mean, the prosecutors out there salivating over all the finger pointing that’s going to go on here, you know, in terms of….
JIM LEHRER: It wasn’t me, it was him. It wasn’t the auditor.
SEN. FRED THOMPSON: It was the board of directors or it was the executives or the executives who left the company early or whatnot. Yeah, I don’t think there’s any question about it.
You’ve got all the congressional scrutiny. You’ve got the Justice Department looking at it. You’re going to have plaintiffs’ lawyers out there by the train load coming in — taking depositions and subpoenaing documents, yeah — we’ll get to the bottom of it.
JIM LEHRER: Does it deserve all this attention, Senator Lieberman?
SEN. JOSEPH LIEBERMAN: Well, it does deserve a lot of attention because as you know it’s the largest corporation ever to go bankrupt in the United States of America.
And the collapse of this company came with shocking speed. I mean, a little more than a year ago, trading for $90 a share. Today I gather you can’t get a half dollar for it.
Of course what’s really infuriating is that a lot of average people lost their life savings while we now know enough to know that the executive … that 30 top executives of the company sold more than $1 billion worth of stock in the same period of time and walked off with all that money.
JIM LEHRER: That alone makes it a big deal.
SEN. JOSEPH LIEBERMAN: It’s a big deal.
JIM LEHRER: Your trip to Afghanistan. Senator Thompson, how close is that war to being over?
SEN. FRED THOMPSON: Not very. Not very. I think certainly the initial thrust of it, the major thrust, the subduing of the Taliban, that’s pretty much over.
But there’s a lot yet to be done. From the rebuilding that’s going on there with the interim government and all the things that they’re going to be facing, the need for an army and an police force and our assistance there and the international cooperation that is going to be needed in all that, but still bombing out, you know, along the border and trying to close up the rest of those caves and then dealing with those probable small pockets of al-Qaida around that are still there hunkered down in Afghanistan or some of these adjoining countries who are just waiting and biding their time to come back.
That’s just in Afghanistan. And then you have the issue of the other places in the world where we’re going to have to address.
JIM LEHRER: Senator Lieberman, the Afghanistan… Can Afghanistan be rebuilt? I mean, without a terrorist element?
I mean, do you see hope there on the ground and the U.S. is going to have to be prepared to stay there a long time to make it happen shall.
SEN. JOSEPH LIEBERMAN: The U.S. And our coalition partners from around the world. Yes, I think Afghanistan can be rebuilt. I mean the fact is as we visited the various countries we did in Central Asia.
One of the impressions I came away with is that the tradition of Islam there has been moderate and not violent. The al-Qaida and the Taliban and bin laden were an imposition on the tradition of the religious tradition of Afghanistan.
Now we’ve got a chance to prove in what I’ve been calling the civil war within the Muslim community around the world that we will support the majority against the fanatical extremists.
It turns out that the Hamid Karzai, the man who is now the chairman of the interim government in Afghanistan is a remarkably, able, fine man with a very good cabinet. They’re facing a desperate situation. Terrible — just hunger — let alone a country in ruin.
I think we’ve all got to work together to prove that we can rebuild this country and that it will be moderate, modern and Islamic. That will be a very important message for the rest of the world. Incidentally, in this will be a participant but fortunately our allies in Europe and Asia are going to contribute most of the money.
JIM LEHRER: Senator Thompson, Senator Lieberman made some headlines today in a speech at Georgetown University in a speech saying now it’s time to move on Saddam Hussein in Iraq. Do you agree with him?
SEN. FRED THOMPSON: I don’t know if he said “now is the time” or not.
JIM LEHRER: I paraphrased.
SEN. JOSEPH LIEBERMAN: You’re right. I didn’t.
SEN. FRED THOMPSON: But I agree with him in that our problem with terrorism will not be over until that situation is addressed. I don’t think anybody thinks that it’s a simple matter or necessarily an easy matter.
But it’s a lot easier than sustaining another Sept. 11. So I think we’re going to have to do it. There are indigenous forces there that can be utilized. I don’t think we’re assisting them enough or allowing them to do certain things they ought to be allowed to do. I think we, you know, need to get about doing things.
We probably don’t need to talk about it too much in detail in terms of method, but the groundwork needs to be laid right now for it.
JIM LEHRER: Sooner rather than later?
SEN. JOSEPH LIEBERMAN: Well, I think Fred has it just right — which is to say as soon as it is wise to do so.
But the main point I was trying to make again today was that the war on terrorism will not be over if Saddam Hussein remains in power in Baghdad because he threatens us more than any other leader in the world today, and when and how we act in Iraq to change the regime is up to the commander in chief, the president and those who advise him. But whether we should have it as our goal to remove Saddam can no longer be in doubt. I think it’s that important to our security.
JIM LEHRER: You’re not talking about bombing tomorrow.
SEN. JOSEPH LIEBERMAN: Not at all, no. This has got to be thought out. The most important thing I think and I believe is that in our government we’re thinking about options about how to make this work.
SEN. FRED THOMPSON: I just hope he doesn’t accept inspectors.
JIM LEHRER: Because if he does the UN inspectors…
SEN. FRED THOMPSON: Will be right back into a cat-and-mouse game indefinitely.
You know, I think an inspection regime is built upon the proposition that there are not weapons there and this is a way to prove it. We know that’s not the case.
And if we get bogged down in all that, in appeals, and Iraq’s trading partners coming in on their side and requiring proof of this, that and the other, you know, it will buy time for him but… That we don’t need to give him.
JIM LEHRER: Senators, thank you both very much.
SEN. JOSEPH LIEBERMAN: Thank you, Jim.
SEN. FRED THOMPSON: Thank you.