Lieberman's legacy

Lest you have forgotten, the war and the president's attempts to destroy the Constitution are not the only things we have for disliking "liberal" Joe Lieberman. Dean Baker has the story over at The American Prospect:

Joe Lieberman played an important role in laying the basis for the accounting scandals of the stock bubble era.

Senator Lieberman’s role dates back to 1993. This was the year when he led the charge against the Financial Accounting Standards Board (FASB) in its effort to require firms to treat stock options as an expense against profit. At the time, companies were able to issue stock options to employees and treat them on their books as though the options had no cost. FASB had become concerned because of the rapid growth in the use of stock options, especially in the tech sector. After carefully examining the issue, FASB issued new rules requiring that options be treated as an expense.

Senator Lieberman led the counterattack, arguing that the new rules would depress stock prices. (Interesting thought – how can accurate accounting depress stock prices?) Lower stock prices would damage the tech sector and cost jobs. Lieberman managed to push through an 88-9 vote on a non-binding Senate resolution opposing the change. FASB got the message and backed down on its proposed rules change.

The rest is history. The stock market, led by the tech sector, developed an enormous bubble. This bubble allowed for all sorts of bogus accounting practices which reached their culmination in the collapses of Enron, WorldCom, and Global Crossing. There was much more here than the inappropriate pricing of stock options, but this was a big part of the story.