John Moss would be the man to tackle Enron
By Michael R. Lemov
John E. Moss, author of the Freedom of Information Act, represented Sacramento in the House of Representatives for 26 years. He has been gone from Washington almost as long. Yet the Enron bankruptcy and the gross failures of Enron's auditors, Arthur Andersen, remind us of him once again, for he was the champion of consumers.
From January through July 1978, Moss almost singlehandedly conducted a series of hearings for his Oversight and Investigations Subcommittee of the House Commerce Committee on the lack of independence of corporate auditors and the need for outside regulation of accounting and auditing standards.
Fueled by corporate scandals of the 1970s involving Equity Funding's nonexistent assets, National Student Marketing's use of false financial reports to inflate the value of its stock and Penn Central's failure to disclose adverse information to investors, Moss recommended that the federal government establish an independent agency to investigate apparent ineffectiveness of auditors and accountants.
Determined lobbying by the accounting profession thwarted any change. Moss warned that there were more than 25 million investors in the nation's publicly held corporations who relied on independent accountants to ensure that financial statements were accurate and truthful. But Moss' warning about the risk to public investors and his reform proposals were ignored after he retired in 1978.
His name resurfaced in summer 2000. The American public was shocked to learn that Firestone Tire Co., one of the great names of American industry, had failed to comply with the law requiring reporting to the National Highway Traffic Safety Administration (NHTSA) that safety defects in its tires resulted in the deaths of 88 people and injuries to 250 over several years.
A similar tragedy had occurred two decades earlier, and at that time was highlighted by Moss's oversight and investigations committee hearings. In May and July 1978, Firestone was called before Moss's committee to defend a radial tire called the Firestone 500. As a Washington Post article in September 2000 pointed out, "Then, as now, the top officers of the company did not admit to a defect in their product though there were hundreds of complaints about the tire disintegrating and 41 deaths." Moss called for amending the NHTSA statute to provide for criminal penalties "for the conscious failure on the part of a corporation to take reasonable steps within its power to avoid death and injury caused by particularly hazardous products."
Moss' accounting and Firestone hearings of the 1970s were not unusual for this tough, independent Californian for he always seemed to be taking on big issues. He tangled with President Lyndon Johnson over his determination to enact the Freedom of Information Act, giving to the public the right to government records. He went toe to toe with the National Association of Manufacturers over his sponsorship of the Consumer Product Safety Act, which remains the primary consumer safety law, and he battled the New York Stock Exchange over his ultimately successful goal of forcing competitive brokerage rates and a national electronic stock market, now known as NASDAQ.
Time and again Moss raised issues such as accounting failures and consumer safety. Sometimes, the industries involved were successful in delaying or defeating effective reform. They were even more successful after he retired.
In the midst of the long awaited congressional debate over campaign finance reform, does Moss' career tells us something about what it takes to be an effective member of Congress and what can impede it? Before his death in 1998, I asked him about the growth of money in politics.
He called the increase in the need for financing of congressional campaigns "absolutely corrupting." He said that with the growth of media advertising, there had been a major increase in the cost of political campaigns. Moss said he had never had a political action committee and didn't want one. "The minute contributions became extremely critical to a campaign, the candidates either had to start compromising their positions or getting up closer to the people who had the money," he said.
As I said goodbye for the last time, I asked Moss' wife, Jean, whether he ever asked her for advice on an issue. "No, never," she said, "he didn't need any advice. He just tried to represent the interests of the average people in his district." Perhaps the words of John Moss and his work on truth in accounting, motor vehicle safety and other consumer and investor protection issues will remind current members of Congress just whom they were elected to represent and what obstacles exist to restoring the public's declining faith in Congress.
Michael R. Lemov, an attorney with a federal government agency, was chief counsel to John Moss' House Commerce Subcommittee on Oversight and Investigations from 1970 to 1977. He is co-founder of the John E. Moss Foundation, which presents an annual award for congressional integrity. The chairman of the foundation's advisory committee is Rep. Robert Matsui, D-Sacramento. The chairman of the foundation board is Rep. John D. Dingell, D-Mich