The National Security State

When even the guys who specialize in this stuff can’t figure out what it really means, it can’t be a good thing:

President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.
Securities-law experts said they were unfamiliar with the May 5 memo and the underlying Presidential authority at issue. John C. Coffee, a securities-law professor at Columbia University, speculated that defense contractors might want to use such an exemption to mask secret assignments for the Pentagon or CIA. “What you might hide is investments: You’ve spent umpteen million dollars that comes out of your working capital to build a plant in Iraq,” which the government wants to keep secret. “That’s the kind of scenario that would be plausible,” Coffee said.

AUTHORITY GRANTED. William McLucas, the Securities & Exchange Commission’s former enforcement chief, suggested that the ability to conceal financial information in the name of national security could lead some companies “to play fast and loose with their numbers.” McLucas, a partner at the law firm Wilmer Cutler Pickering Hale & Dorr in Washington, added: “It could be that you have a bunch of books and records out there that no one knows about.”

Maybe this is intended to mask something like the huge inquiry for ammunition we just sent to Russian arms suppliers–enough to keep the British army in bullets for 15 years–to prop up the government in Afghanistan in case Hillary gets elected in ’08.

Here’s another, more ominous possibility suggested by my brilliant and beautiful wife: What if this change is intended to mask a sudden and unexpected movements of large sums of money out of certain market sectors–say, airlines , insurance, or shipping–that would be vulnerable to another massive terror attack?

I have absolutely no idea whether this power could be used for such a thing. But if the experts in securities law don’t know what this is about…


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