Fighting fear

July 24, 2002

OH, TO BE soothed. To be told by someone with authority that the stampede from the stock market isn't a big deal. Not to worry.

A voice of confidence might at least offer assurance that the worst is over. That this sell-off is merely a rough patch on the road to a healthier financial system. If only big investors -- and all the little guys counting on the stock market for retirement and college funds -- could hear and believe that all they have to fear is fear itself.

But this month's stock plunge looks like one crisis that Americans are going to have to tough out on their own. There's no FDR in sight. President Bush's attempts to calm jangled nerves have only sparked new spurts of selling.

"My attitude on Wall Street is they'll buy you or sell you depending upon if it's in their interest," he said Monday as the Dow spiraled below the 8,000 mark for the first time in nearly four years.

Mr. Bush's analysis of the motivation that drives capitalism is doubtless correct. Hearing it put that way by a president who acknowledged that as a businessman he was "somewhat skeptical about what was taking place on the floor of these exchanges" makes investors want to cash out whatever is left and find a mattress to put it under.

It's probably best if Mr. Bush refrains from commenting on the markets. Especially while they are open. His Wall Street speech two weeks ago, which was intended to take the corporate world to task for repeated incidents of cooking their books, marked the beginning of a 1,500 point drop in the Dow, a loss of 16 percent.

No magic bullet is going to produce an instant rebound regardless of what the president does. A once-overvalued market has now slashed some stock prices to below what they are worth. History suggests the pendulum will swing back and forth until a balance is found.

Mr. Bush could make a positive contribution, however, by putting a quick end to the squabbling among House Republicans that is holding up action on legislation designed to toughen federal accounting standards.

A contingent of GOP corporate advocates, led by Rep. Michael G. Oxley of Ohio, is trying to blunt the impact of these new rules on the industry. The goal is to water down legislation sponsored by Maryland Democrat Paul Sarbanes that passed the Senate 97-0.

The president has called upon Congress to send him a measure that meets the "goals" of the Sarbanes bill, but declined to be more specific for fear of alienating his conservative base. He'll sign what he gets.

In today's climate, odds are that the corporate lobby won't prevail. Speaker Dennis Hastert may simply schedule a vote on the Sarbanes bill -- or something very similar -- before the House adjourns Friday for its summer recess. It will probably pass overwhelmingly, and victory declared all around.

The president could score a genuine victory if he got out in front of the pack.

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