SYNOPSIS: Commentary on the obscure and dishonest chairman of the House Financial Services Committee, Mike Oxley

Quite a few people rubbed their eyes back in July when accounting reform legislation sponsored by Senator Paul Sarbanes became law, not as the Sarbanes Act but as the Sarbanes-Oxley Act. It was, if you knew anything about Michael Oxley's legislative career, as if Prohibition-era Chicago had passed a Ness-Capone clean government ordinance.

But this summer, when plunging stocks and corporate scandals dominated the news, all sorts of unlikely people declared themselves ardent defenders of the small investor against corporate insiders. Mr. Oxley, the chairman of the House Financial Services Committee — and big accounting firms' best friend on Capitol Hill — suddenly emerged as the co-sponsor of that reform bill. Harvey Pitt, chosen to head the Securities and Exchange Commission precisely because the accounting industry regarded him as a softer touch than Arthur Levitt, tried to portray himself as tougher than his predecessor. George W. Bush, whose business career consisted of a series of murky insider dealings, declared himself outraged at corporate evildoers. Fortunately, Dick Cheney didn't make any speeches about business honesty; that would really have made our heads explode.

Cynics questioned the sincerity of these sudden conversions. They warned that it would be business as usual after the midterm election. But the cynics were wrong: the bad guys didn't even wait for the election. As soon as the public was distracted by the threatened war with Iraq, they began backsliding in earnest.

Not surprisingly, Mr. Oxley is leading the retreat. It was always surreal to see his name on that bill; as the Wall Street Journal editorial page put it, he "has carried oceans of water" for the accounting industry. In 1995 he led the fight for legislation that protects corporate officers from shareholder suits. As late as May he lashed out at Merrill Lynch, not for touting questionable stocks to win lucrative banking deals, but for agreeing to pay a fine when its wrongdoing came to light. But who knew? Maybe Mr. Oxley had finally seen the light.

He hadn't. He was just waiting for his moment. It came last week, as he apparently torpedoed plans to appoint someone effective to head a new accounting oversight board.

The Sarbanes-Oxley Act created the new board to replace the accounting industry's previous, spectacularly ineffectual self-regulation. Since the purpose of the board is to restore investor confidence, it's crucial that its head be someone forceful, with unquestioned integrity. The job was first offered to Paul Volcker, the former chairman of the Federal Reserve. When Mr. Volcker turned it down, the focus shifted to John Biggs, head of the T.I.A.A.-CREF pension fund and a strong advocate of reform. Indeed, some news reports indicate that Mr. Biggs believed that he had been offered the job, and had already been making arrangements to retire early from T.I.A.A.- CREF.

But apparently it is not to be. Let me just quote The Wall Street Journal on this: "The big accounting firms won't dare speak on the record. . . . All signs suggest they're working instead through Republicans in Congress, specifically Ohio's Mike Oxley. . . . They don't want pension fund chief John Biggs to lead the new accounting board because they fear he might actually force the industry to shape up." What The Journal doesn't point out is the obvious: The accounting industry may have a lot of clout, but this wouldn't matter if the White House made it clear that the S.E.C. must choose an independent board. There's only one possible conclusion: The administration doesn't really want corporate reform.

This isn't just about Mr. Biggs; it's now hard to believe that any credible reformer will be offered the job, or accept it if offered. And that's grim news. Last summer stocks were slumping, not just over fears about the economy but because of concerns that ordinary investors simply couldn't trust what corporations said. Stocks recovered, briefly, in part because the nation believed that reform was well in hand. Now stocks are slumping again, and the recovery is sputtering. What will happen when the public realizes that summer promises of reform weren't sincere?

What's amazing is that the enemies of reform felt free to take off their masks even before the election. One can only hope that the media report what's happening, and that voters, as they look at their shrunken 401(k)'s, remember the false promises of summer. Fool me once . . .

Originally published in The New York Times, 10.8.02