- The Washington Times - Thursday, September 19, 2002

Washington's newest power-brokers are flexing their muscles on Capitol Hill these days and some of Wall Street's bluest blue chips might get a black eye in the process. In a move that stunned some Beltway veterans, House Financial Services Committee Chairman Mike Oxley recently turned up the heat on several well-known investment companies, probing practices of their CEOs and research analysts. Instead of carrying Wall Street's water, he and his allies on the committee are fighting for a new and increasingly powerful constituency the Bubble Boomers.

Going to bat for the Boomers may cause some boardroom "Malox moments," but it's also smart market medicine and even shrewder politics.

This new investor class came of age during the boom times of the last decade, purchasing stocks at unprecedented levels. As a result, more than half of U.S. households now invest, up from about 5 percent 20 years ago. Although tempered by market gyrations when the bubble burst over the last two years, they still analyze stock charts and tune in CNBC like their elders read baseball box scores and watched "The Honeymooners." Connected by economic interest rather than political ideology, Bubble Boomers are just beginning to make a big splash among policymakers along the Potomac.

While it disappoints bogus reformers like Common Cause, legislators in the real world listen more to voters and constituents than hired guns or CEOs. And the Bubble Boomers are now putting heat on Congress.

Enter the House Financial Services Committee. In the last month, Mr. Oxley, with the support of his ranking Democrat, Rep. John LaFalce, stepped up the inquiry of several well-known Wall Street firms, including Credit Suisse/First Boston, Citigroup and Goldman Sachs. All three will deliver boxes of documents to the committee today, which will review them and likely schedule a high-profile hearing in the next several weeks. From New York to Washington, the howls from some in the securities business are louder than the engines on the Delta Shuttle. But Mr. Oxley and his committee hear a different roar.

No one voice speaks for the Bubble Boomers. Neither officially organized, nor formally represented, they include such disparate folks as union members with pensions, recent retirees with IRAs and reformed day-traders. But they do have an unwritten political manifesto of sorts one that the Financial Services Committee chairman understands. And he is following a script that will strengthen markets, boost his party's political fortunes, and bolster sagging investor confidence.

The manifesto has three parts. First, defend capitalism. Strong advocates of capitalism, in Congress and in business, should attack practices that undermine the fair and efficient operation of markets. When corporate insiders manipulate the flow of information to investors or rig undisclosed deals in exchange for investment banking business, these practices should be divulged and stopped. A prominent Republican lobbyist recently admonished a group of his peers and Senators in a Capitol Hill meeting: "I'm a capitalist and I want to defend capitalism. These practices undermine the whole system and we should be against them whoever is doing it." The Financial Services Committee investigation is doing just that.

Second, reject the politicization of corporate misconduct. If there is such a thing as "corporate cronyism," Republicans don't have a monopoly on it and they are tired of Democrats saying they do. The Financial Services Committee will question the role of Democratic heavyweight and former Clinton Treasury Secretary Bob Rubin for his involvement in practices currently under media and regulatory scrutiny while helping to run Goldman Sachs. By scrutinizing Mr. Rubin, and possibly other Democrats, the investigation will help Republicans demonstrate that corporate misconduct is not a partisan enterprise.

Finally, champion the interests of investors in Congress. Twenty years ago, they had less political stroke. But today, Bubble Boomers, about 90 million strong, want advocates in the public-policy process to shine a bright light on markets, examine them, and clean up problems discovered along the way. "Congress has a number of tools at its disposal and they don't want to micro manage markets," one lawyer knowledgeable with the investigation told me. "But, if they can get companies or regulatory agencies to make changes by using the bully pulpit, that's as good as passing a bunch of bills." It also demonstrates that Congress is squarely on the side of investor interests.

By recognizing the emerging political clout of the Bubble Boomers and addressing their concerns, Mr. Oxley will strengthen the stock market and provide political dividends to his party along the way.

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