This is a partial transcript from "Your World with Neil Cavuto," October 23, 2006, that was edited for clarity.
NEIL CAVUTO, HOST: Well, still, those relatively few scandals prompting a major overhaul of the rules, much stiffer regulations — many business leaders afraid to do anything. Is the cure, then, worse than the disease?
Let’s ask Steve Forbes — Steve, editor in chief of Forbes magazine.
What do you think, Steve?
STEVE FORBES, PRESIDENT & CEO, FORBES INC.: I think there has been an overreaction, certainly after those two major scandals.
We got Sarbanes-Oxley, which put in a lot of paperwork, which is drowning small companies. That’s why IPOs are going overseas to London and Hong Kong. And paper walls don’t stop crime. Stiff sentences — convictions and stiff sentences are the best antidote, best preventive for corporate crime.
CAVUTO: But do you think, Steve, that CEOs or prospective CEOs look at this video of Jeff Skilling today and say, "Oh, boy, you know, I better be careful," that that alone will do it, that you don’t need any sort of enforcements mandated by the government?
FORBES: Well, you had enforcements, obviously, before the scandals broke. Fraud was wrong. These gentlemen were convicted of laws broken on the books while they committed those crimes.
So, wrongdoing has always been a crime. It’s just a matter of enforcement. And I think the — what’s happened to these executives, and the very, very stiff sentences they have gotten, I think, are the best preventive.
And, in terms of preventing crime, paper won’t do it. We saw that in scandals like Refco and some other recent collapses. If people want to commit fraud, they are going to find ways to do it. The key is, they get found out and they get sentenced.
CAVUTO: All right.
So, now, from here, and all the gloom and doom talk when these scandals first came to light, that almost every company was populated by crooks, that has since been found not to be the case, by a wide margin, but not much reporting of that. What do you make of that?
FORBES: Well, there — there always is a prejudice against commerce.
In every Hollywood movie, the villain is often the big corporation, especially oil companies. And, Neil, we have seen, in just the last couple of years, there are more wrongdoers, it seems, in Congress than there are in corporate suites these days.
CAVUTO: And, yet, it’s Congress that wants to judge these guys.
FORBES: Yes. Yes. (LAUGHTER)
CAVUTO: But we will leave that for another show.
Steve, we hit a record today, on the same day Jeff Skilling was told he was going to be going to jail for a long time today.
Any weird simpatico with that?
FORBES: Not at all.
It shows the system works. When people cook the books, eventually, they get found out, because they literally run out of cash and ways to try to hide their shortcomings. And, so, they get found out. And we have seen just — just today, when you get found out and you commit a big crime, boy, you are going to do a lot of time.
CAVUTO: All right.
Now, you know, some people are saying we’re having a melt-up in this market, Steve. Do you agree with that?
FORBES: A melt-up?
No, I think what’s finally happening is the market recognizing the extraordinary strength of corporate America, business America. Profits are strong. Wages, real wages, are starting to go up. Capital spending is in good shape. The consumer is in much better shape than all of the — a lot of general media recognize. FOX, I think, is a little different.
But there are a lot of strengths out there. Now, we have a lot of problems. We have got a lot of problems overseas with Iran and Iraq, here at home with inflation.
CAVUTO: All right.
FORBES: But we’re overlooking the fundamentals. And that’s what the market is finally recognizing.
CAVUTO: Thank you, Steve. Always good seeing you — Steve Forbes.
FORBES: Thank you.
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