WorldCom cloud over Wall Street

Traders in New York: Another day, another downfall?

By Nick Cosgrove BBC Business staff

As we flew in to New York, a thunderstorm was breaking. The skies above Manhattan seemed to reflect the story of WorldCom.

Back in the UK, you'd be forgiven if you had no idea what WorldCom was before this scandal broke.

But in the States, WorldCom is a household name. Three in every ten long-distance calls traverse its network, and the company's fibre-optic cables play host to 70% of all internet traffic at some point or other.

The sheer size of the scandal, combined with the omnipresence of the company and clear memories of Enron's disgrace last year, mean that WorldCom is a top topic of conversation everywhere.

Outrage

In word at least, those in high places are playing hardball this time.

Harvey Pitt, the chairman of the powerful financial regulator the Securities and Exchange Commission, used a dinner at the Economic Club of New York on Wednesday evening to berate the company's actions.

"What happened at WorldCom is an outrage," he said. "What we are looking at isn't a mistake-- In Brooklyn we call it fraud."

In the bars around the financial district of Wall Street, the mood was surprisingly upbeat.

Harry Poulalkakis, who runs Harry's Bar and has been involved with the Wall Street community for over 40 years, was laid back.

"In my lifetime I've seen this type of thing at least half a dozen times," he said.

"You always have individuals who spoil things, but we can overcome that. Life goes on."

Been there, done that

As for the traders we spoke to, most expressed confidence that the market was fundamentally strong. This, they said, was an exceptional case, not the norm.

That doesn't stop some, such as Sam Berios, who works for a global consulting firm, from retaining a deep cynicism about improper accounting practices.

'I think it's rampant," he told us. "As a result, I've changed my investment behaviour. I no longer trust stockbrokers to look after my money."

And it goes without saying that everyone we have spoken to believes that Corporate America has "dropped the ball" over WorldCom.

But Americans remain immensely respectful of big business. The lingering resentment you might expected if such a scandal had happened in the UK is notably absent.

There is optimism aplenty, a feeling that this storm is a temporary blip and that blue skies lie ahead for corporate America.