“I’m talking about your father! There were promises made across this desk! You mustn’t tell me you’ve got people to see — I put 34 years into this firm, Howard, and now I can’t pay my insurance! You can’t eat the orange and throw the peel away — a man is not a piece of fruit.”— Willy Loman, in Arthur Miller’s Death of a Salesman

PROLOGUE

This writing was undertaken in mid-2006 when private equity funds were riding along their upward trajectories, attaining their apogee sometime in mid-2007, when the Blackstone Group succeeded in getting off its initial public offering. It even attracted some billions of dollars of sovereign Chinese wealth funds — with Kohlberg, Kravis, Roberts waiting in the wings to do an encore.

This was a period of time that fully justified the strident reference to the phrase “mania” in the title.

But then came late 2007, with its manifestations of metastases regarding investments in subprimes, structured investment vehicles, collateralized debt obligations, derivatives and other forms of financial instruments that have been allowed to spread throughout our corporate and financial systems without control and certainly without transparency. As a consequence, the private equity acquisitions binge and related mania are now in remission.

The recent torrent of corporate takeovers by the Blackstone Group, KKR and other private equity funds, aided and abetted by hedge funds and other financial institutions, is a source of anxious concern for me. This anxiety stems from the fact that, in my view, this current development is inimical to the role of the modern American corporation as the “locomotive” for corporate democracy, or democratic capitalism.

Thus, to the extent that enormous pools of resources are concentrated in fewer hands with narrowing objectives for the utilization of those resources, the corporate objectives, which are informed by their respective charters, and safeguarded by statutes and judicial judgments, are not being fulfilled. And to the extent that the takeover process continues unabated or accelerates, our society will be adversely affected.

Before proceeding, “Willy Loman” is intended as the metaphor for all those persons, groups, communities, enterprises and governmental jurisdictions that may be impacted inimically by this takeover phenomenon, just as it will stand for present and succeeding generations, including, inter alia:

* Those whose economic security is threatened by possible loss of jobs, and the critical reversal in the adoption of employer-sponsored retirement plans, from defined benefit to defined contribution; corresponding shifts were effected with medical and health benefit plans for employees and retirees — all adding to the traumas of our Willy Lomans.

* Their communities, where home and other real estate values are put in jeopardy by the acquirer’s propensity to move properties and other venues about as tax maneuvers, incident to their restructuring.

* The various cultural and other philanthropies that had been supported by the locally based acquired enterprises, and which lose that support when their benefactors are controlled by some alienated acquirer intent on turning the entity into a cash cow IPO.

* The financial condition of the corporate enterprises, where any liquidity that may have existed in the acquired entities is squeezed out, leaving “pulp” in the form of goodwill or other intangibles to counter-balance the liabilities assumed on the acquisition.

As noted in the prologue, the private equity acquisitions mania is in remission; nonetheless, the Willy Loman trauma is very much with us, with even more Willys from expanding cadres of our citizenry, involving increasing numbers of their communities.

We now see that Willy Loman’s balance sheet has been critically and cruelly fandangled. Thus, his liabilities (mortgages, home equity, credit card, student and other loans) have spiraled upwards, while his assets (home, 401(k)s, IRAs and other investments) have skewed downwards.

Now, as it turns out, most grievously traumatized are those who contrived and celebrated lavishly during the acquisitions orgy, those associated with the private equity funds, banking, brokerage, other financial institutions and their sycophantic hedge funds — all leading to the prevailing traumatizing of our nation.

What counsel might I now offer in the hope of restoring confidence in corporate enterprise, so that it could again fulfill its especially daunting role envisaged by me in the opening gambit to this jeremiad?

So it is that I probed my consciousness and conscience, my viscera and mind, and lo! whether it be eureka or epiphany or just plain serendipity, there floated out of the recesses of memory the concluding chapter of my 1976 book, More Debits Than Credits.

That chapter, captioned “Despairing but Not Despondent,” began: “In his mid-1973 address before the American Bar Association, Mr. Justice Harry A. Blackmun referred to the Watergate disclosures and lamented, ‘The very glue of our governmental structure seems about to become unstuck.’”

“One might fairly infer from the dozen preceding chapters that I sense that the glue of the accounting profession’s structure seems about to become unstuck. And going beyond this single profession, and observing happenings outside the scope of this work, it would seem that the glue of our corporate structure seems about to become unstuck.”

After providing my agenda for the advancement of the conceptual standards practices and procedures for the accounting profession, I sounded “A Call for a Corporate Accountability Commission.”

I then turned to an article in the March 1974 Yale Law Journal by William L. Cary, a professor of law and former Securities and Exchange Commision chairman, titled, “Federalism and Corporate Law.”

The article concluded: “In summary, as long as we operate within a capitalist society and as long as confidence in management is prerequisite to its continuance, there should be a federal interest in the proper conduct of the corporation itself as much as in the market for its securities. A civilizing jurisprudence should import lifting standards; certainly there is no justification for permitting them to deteriorate. The absurdity of this race for the bottom ... tolerated and indeed fostered by corporate counsel — should arrest the conscience of the American bar when its current reputation is in low estate.”

Elaborating on this theme, I propose the establishment by Congress of a Corporate Accountability Commission. Such a commission’s responsibilities would include Professor Cary’s charge; but in addition, I would look to it to assume the responsibility for studying, determining and promulgating standards pertaining to corporate morality, antitrust and monopoly aspects, accounting and accountability, and corporate tax policy — all this on a national and multinational scale.

With the horrendous, humongous experiences of 2007-2008 front and center in mind, I would add to the charge for such a commission regulatory oversight of, say, the Federal Reserve System, the Office of the Controller of the Currency, various rating agencies, et al.

Further, I would look to such a commission to establish rules for entry into the marketplace of newly created or designed or structured financial instruments, and to permit such entry only when, as and if the marketplace has been assured by all of the relevant professional organizations that there is full and complete transparency and integrity with respect to those instruments.

In short, I would expect this role to be somewhat analogous to that of the Food and Drug Administration in its area of responsibility, and if there is a question with respect to any security, that it be, as with the FDA, accompanied by a “black box” or “skull and bones.”

More Debits Than Credits concluded with what might well be the peroration for this essay, “Despairing but Not Despondent:” “Will even the full and complete implementation of all of these proposals eradicate the prevalent malaise regarding our corporate society? It may help measurably to keep the ‘glue of that society from becoming unstuck.’ But yet even such an implementation, however successful, would not be sufficient to fulfill the evolving needs of our society in the area of corporate responsibility and elsewhere. Instead, or in any event in addition, there is a compelling need for transcendence — the need to move to a higher level of consciousness, to reach outward and upward to that quality or state of being that extends beyond the limits of ordinary experience.”

“The urgency for such transcendence in all sectors of our existence was underscored in an essay by Nobel Laureate Albert Szent-Györgyi: ‘We either adapt to the new situation, revamp our thinking and human relations, exchange our outdated ideas of glory, force and domination and exploitation for mutual understanding, respect, help and collaboration, or else perish.’”

“It is because I sense that within our society, the accounting profession included, there are the forces capable of this adaptation and the quantum leap upward and outward, that while I may be despairing of the present, I am certainly not despondent for the future.”

Aware that 2008 is destined to be the “Year of Change,” I am committed to holding fast to my remaining guarded optimism, and with abiding faith in the youth of our nation and without despondency.

And if I find my grasp on optimism slipping, I expect to grab hold of the counsel from my Greek friend of long standing, Sisyphus.

Thus: The rocks may be getting bigger and heavier, the mountains may be getting taller and steeper, but never give up!

Abraham J. Briloff, CPA, Ph.D, is the Emanuel Saxe Distinguished Professor Emeritus at Baruch College/City University of New York.

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