From the heart of Wall Street, while recently introducing a group of African-American church pastors to the New York Stock Exchange, Jackson told me that what went on at outfits like Enron, WorldCom, Arthur Andersen, and Adelphia amounts to "an erupting volcano that affects everything in its path."
WRACK AND RUIN. He has that right. And it's about time that sentiments from the lips of people like Jackson inspire the Securities & Exchange Commission and other watchdogs to do more than just bare their teeth. Yes, you can question Jackson's choices -- his taste for the spotlight, his marital indiscretion. But he has always been a man who fights for the rights of common folk.
Yes, he flies first class while most Americans struggle to pay for a seat in coach. And, yes, he runs a nonprofit whose bookkeeping has raised eyebrows. Still, whatever fault you find in Jackson, he hasn't come close to inflicting the financial ruin that many of America's misbehaving CEOs have wrought.
The sinister governance at Enron and Arthur Andersen has snatched many billions of dollars out of investors' hands. More than $7 billion in accounting improprieties occurred on the watch of WorldCom former CEO Bernie Ebbers and his cronies. As corporations caught in scandal go bankrupt and employees are laid off, families suffer while many of those outfits' execs stay rich, if not always happy.
THE NEED FOR "TRANSPARENCY." Bankers at Salomon Smith Barney doled out shares in hot initial public offerings to big-shot executives at telecom and Internet giants, according to information uncovered by New York Attorney General Eliot Spitzer. As a result, these rich execs cashed in and made millions more -- and the underwriters got tens of millions in investment-banking fees. So Jackson speaks the truth when he says: "It's not right for the elite that have incestuous relationships to take the heart out of the watermelon, and everyone else gets the seeds and rind."
What's Jackson's solution? It's the same fix he has been advocating for the past few years: What the nation needs is "open and free access to capital." As Jackson puts it, "transparency" above all. "Common people must have access to the same information, at the same time, as the elite," he says.
As Jackson talks about privilege, my mind wanders to the old Michael Douglas movie Star Chamber. The film borrowed its title from the secret court that dealt swift and draconian justice to the English king's enemies, especially during the reign of Charles I, when it usurped the authority of parliament. The star chamber's judges were the select few, the powerful insiders who regarded it as their right to ordain the lot of everyone else. In today's world, their heirs are the star CEOs, cutting deals and swapping megabucks in shadows and secret.
SEVERED TIES? Knowing that Jackson's buddy, Citigroup CEO Sandy Weill, is a star in his own right, I ask Jackson about Weill's responsibility. "We see Citigroup as a lender in [the malfeasance at Enron and WorldCom], but no one has accused Sandy of anything corrupt," Jackson says. But the investigation into Citigroup is continuing, right? "Sandy will handle this like he handles any other crisis," Jackson continues. "You will not see Sandy having to duck [handcuffed] to keep cameras away."
Indeed, Weill is working hard to avoid just that. Beset by multiple investigations and lawsuits related to Citigroup's financing relationships, he has been meeting with SEC Chairman Harvey Pitt to formulate a settlement that would completely sever ties between Citigroup's research and investment-banking businesses (see BW Online, 10/3/02, "A Clean Break for the Street?").
That Jackson befriends the executives of outfits he pledges to police bothers many. But this is what people don't know: Jackson first encountered Weill in the early 1960s, at the height of the civil-rights movement. That's when Weill, along with former SEC Chairman Arthur Levitt, made Clarence Jones (then a staff lawyer for Martin Luther King) the first black partner of a white New York Stock Exchange firm, Jackson says. Jones joined Weill and Levitt at the brokerage Carter, Berlind, Weill & Levitt.
"HISTORY OF INCLUSION." "Sandy made the case for affirmative action and that Wall Street had to look like Main Street," Jackson says. "What I really know about him [reflects] a history of inclusion, reaching out."
Americans will have to wait and see if Jackson is right about Weill. But even Barbershop's Eddie ought to admit that Jackson makes sense when it comes to changing the ways of Wall Street. Crockett is a correspondent in BusinessWeek's Chicago bureau