On the other hand, Sherman is a smart guy, he has a number of summa’s and magna’s attached to the various laude’s on his resume. Could he really have forgotten Accounting 101? Perhaps he really did know the truth, but was happy to fudge his answer, obscuring the truth, because the truth was simply not in his interest at that moment.
Is this not every more scary?
Whether mistaken or malicious, Sherman and his crew are severely harming shareholder capitalism. They are claiming control over the entire shareholder’s equity portion of the balance sheet based on the relatively small section into which they have placed their investment. They are asserting sovereignty over things to which they have no legitimate moral or legal claim.
All of this raises some fascinating questions, the timeliest of which is: How does a CEO answer questions about financial accounting when they’re asked by dimwits who don’t know enough to understand the answers? Honestly, I don’t know what I would do if I were in the CEO punishment seat being thumb-screwed by Barney Frank, or mau-maued by Maxine Waters. I hope that I’d confess to the truth which is something like:
“Congressperson, you’ve asked questions about matters of financial accounting, but have not taken even the slightest effort to familiarize yourself with the vocabulary or principles of this technical discipline. Do you know anything about double-entry bookkeeping? If I told you that a dividend payment is a debit to retained earnings and credit to the cash account, would you understand any of that? What was your major? Do you balance your own checkbook? Do you prepare your own tax return?”
Given the Stalinist show trial we saw this week -- all based on what appears to be a plain ignorance of a few simple accounting principles -- it would appear to be a public service to point out that the dividends, salaries, junkets and all the rest are done without a single deduction from the capital accounts into which the taxpayer funds were shoved.