Rudolph Giuliani on Corporate Reform

Rudolph Giuliani, New York City's former mayor, weighs in on corporate reform on ABCNEWS' Good Morning America.

ABCNEWS' CHARLES GIBSON: We turn now to Rudolph Giuliani, New York's former mayor, also a former federal prosecutor who made his name prosecuting some of Wall Street's biggest financial criminals back in the 1980s. Corporate reform is a major topic of discussion in New York and Washington these days, so an appropriate guest for us. And he joins us now. Good to have you with us.


GIBSON: Has this gotten out of hand? There's a pattern, executives falsely building up the profits of their company, the stocks go through the roof, they cash out. They've got millions to build mansions, and the pensioners and the other people, or stockholders are left holding the bag. Has it gotten out of hand?

GIULIANI: Well, sure. I mean, yeah, it's gotten out of hand in the sense that a lot of it has happened all at once, at one period of time. Probably this has been going on for a long time, meaning maybe a hundred years in one way or another, or more. But the reality is a lot of it has happened in the last several years, maybe as a result of the economy, the market and everything else.

GIBSON: Exacerbated by the moment, the markets are.

GIULIANI:Right. And we're finding out a lot more about it. And although this a horrible thing, and it's a horrible thing for the people directly affected by it, as a society, this is a good thing for us. Because …


GIULIANI: Because we correct it. There's this imperfect way in which we get better; we find out about the bad things people are doing, the way in which they can abuse an otherwise good system, and then we correct it. And I think that's what you see happening in Congress. I think the president will sign the bill. And that, again, won't be perfect, but it'll be an improvement.

GIBSON: Are we correcting it, though? This bill yesterday, the House and Senate combined, 522 votes for the bill, only three against.


GIBSON: The president, who was wavering about this, now with this kind of momentum, obviously, will sign …


GIBSON: …this bill. Is this bill going to do something about the problem?

GIULIANI: Imperfect. It'll probably be somewhat of an overreaction. It'll probably miss the mark in a few places. But the idea of more transparency, more openness, more regulation, putting--putting a lot of this information out there so people can assess it. If you think about--think--think about the way in which a lot of this was done, in which debt was hidden. Well, if you put that debt out there, and you get people to see it, and you get them to be able to assess it, then--then we're getting closer to what a free market should be, one in which people have the information to assess the investments they should make. Whereas if you--if you hide it, then people think a company's a lot more profitable than it is. Then, all of a sudden, it all falls apart.

GIBSON: As a former prosecutor, what's your idea of the best way to restore confidence? Is it simply to get information out there, true information in financial statements? Or is the thing you need to do to restore confidence, literally, to put some of these guys behind bars?

GIULIANI: Both, it's both, and they're doing both. The reality is, when people commit serious crimes--these are serious crimes--they take a lot of other people's money, which--which they've done. You have to have very strong criminal penalties. This bill provides for that, and--and the Justice Department, I think, is moving very aggressively to make point. But the second thing--you can't just do it one case at a time. Then you have to look at what went wrong and try to correct the system, and I think that--think that's what we're doing. And trying to correct the system means getting more information out, full disclosure, open disclosure. And if I could give advice to corporate executives having to sort of face this new era: If there's bad news, don't be euphemistic about it, get it out. Explain it. Put it out. It protects you. If you put the information out, people can discount it. They can deal with it.

GIBSON: Second question for a former prosecutor. These are very hard cases to prove in most cases, when you go into court and you have to get juries to understand things like special purpose entities and complex derivatives and whatever. That's not easy. Can it be done?

GIULIANI: Sure. That's what makes a very good trial lawyer on either side. I mean, that's what makes a very good prosecutor. The idea of taking a very, veyr complex idea--booking debt, how you book it, whether you capitalize it or you expense it or--try to put that into language that people can understand. Give them examples that they can understand. And one thing people can understand very, very quickly, if you prove it correctly, is cheating. It doesn't matter if the cheating is for $10 or $10 million, people can understand that. You know, someone hiding how much debt there is.

GIBSON: Is there accountability in this bill as far as you're concerned? You always worry, the accountants say, `No, no, no. The company executives did it.' The company executives say, `No, no, no, the accountants approved this.' And everybody points at one another.

GIULIANI: That's what …

GIBSON: And nobody gets blamed.

GIULIANI: That's what the trial, ultimately, that's what the criminal trial is all about. I mean, ultimately, the criminal trial is about was it done knowingly and, obviously, all these people will defend on the grounds that their lawyers and their accountants gave them some kind of advice. But then, you know, you see how reasonable that is. And in many cases, it sounds unreasonable.

GIBSON: One other question for you before you go. The 9/11 memorials, there now have been six plans presented. They all have business office retail space as well as memorials, transportation complex. You've wanted a full memorial down at that site. Do you like any one of these six plans?

GIULIANI: I think they're a start from which we can discuss it. I wouldn't subscribe to any one of the six. I think that this has to be mostly about a memorial, a library, a museum, something that enshrines, a hundred years from now...

GIBSON: You're now saying …

GIULIANI: …the sacrifice.

GIBSON: … mostly memorial, though, as opposed to totally memorial.

GIULIANI: Well, the footprint has to be totally memorial. The area where the attack took place should be all memorial, whether--whether--like at 7 World Trade Center, you build a tower or something like that, that's OK. But if you're talking about the actual site, the site that we began to refer to as ground zero, that you saw many times, and I almost lived that for a while … GIBSON: Right.

GIULIANI: …that should be a memorial. That should be reserved for remembering the sacrifice of these extraordinarily brave people. A hundred years from now people are going to judge us based on how we handled this. Let's not cover it over out of, you know, I don't know, some immediacy.

GIBSON: Rudy Giuliani, good to have you with us, as always.

GIULIANI: Thank you. GIBSON: All the best. Thanks for being here.