As many of you who have read my articles know, there are two Frey rules of politics. The first is don't get in a fight with someone who buys their ink by the carload i.e., the press. The second is if you have to explain, you're in trouble. Unfortunately, the President has violated both of these rules. The issue is the sale of stock by the President in 1990 when he was a board member of the Harken Energy Corporation. The President properly notified the SEC prior to the sale; however, the President notified the SEC of the conclusion of the sale 34 weeks late. The President's reasons for not notifying the SEC on time have varied, giving the press and the Democrats a chance to exploit this story, which is not new.

It is obvious that the President was not trying to hide anything or he would never have notified the SEC about the sale. The SEC looked into this matter years ago and decided not to take any action. However, today, there is a different atmosphere regarding corporations, their officers and directors. The atmosphere is poisonous, as it should be. Enron was bad enough, but then came WorldCom. Who could believe that $3.8 billion of expenses were apparently mischaracterized, and the stock, which once was above $50, plunged below $1.00? The President and the Administration are trying to practice damage control. The President has made several speeches and reminded everyone of his reform proposals in March to hold CEOs more accountable and to expand financial penalties for violators. The President has tried to get ahead of this issue and diffuse it as much as possible. For the President, this is probably a short-term problem. For the Republicans running for office this November, it could be a terminal problem. The President has 28 months to turn this around. Members of Congress have four months.

The Democrats have been frantically searching for an issue and, up to this point, have not had any with traction. However, this issue has traction. Over one-half of the households in the United States have someone investing in the market. Each time they look at their statements, they are reminded of what is wrong with the corporate world. The Republicans, being in the majority, have some control of the hearings in the House. In the Senate, there is no such control and you can be sure Senator Daschle and friends will keep this on the front burner for as long as possible. The President may get a break as Congress is going into recess at the end of July for over a month. They will, however, be back in September and probably stay in, until the first week of October. That is plenty of time to cause significant damage.

The Clinton Administration had an Attorney General that looked the other way so much that she was cross-eyed. There was little investigation or prosecution of corporate wrongdoers. The Democrats in Congress for the past ten years have done nothing. But politics is not fair; perception equals reality. The Democrats can ignore the facts and their past inactivity and attack the President because they smell blood. With the margin in the Senate being 51-49 Democrat and the Republicans up only 7 in the House, it doesn't take much to tip the scales one way or the other. This is the first issue I have seen that has the possibility of tipping the November election in the Democrats' favor in both the House and Senate. One last truism: a day in politics is a lifetime. We have many lifetimes left before the November election.

Lou Frey represented Central Florida in the U. S. Congress from 1969 to 1979. In his last election, he received 78% of the vote. He was elected one of five Republican leaders in the House of Representatives during the 93^rd and 94^th Congress. He served on...