Alex Berenson

DATE April 22, 2003 ACCOUNT NUMBER N/A
TIME 12:00 Noon-1:00 PM AUDIENCE N/A
NETWORK NPR
PROGRAM Fresh Air

Interview: Alex Berenson discusses changes in accounting practices
TERRY GROSS, host:

This is FRESH AIR. I'm Terry Gross.

There are 14,000 publicly traded companies in the US. My guest, Alex
Berenson, says that expecting all of them to be honest is unrealistic. But by
the start of the 21st century, all manner of companies were abusing accounting
rules to mislead their investors seemingly without fear of being caught. In
his new book, Berenson investigates the accounting methods many companies have
used to help them publish profitable but misleading and inaccurate quarterly
earnings reports.

Berenson is a business reporter for The New York Times and a former reporter
for The Denver Post and TheStreet.com. His new book is called "The Number."
The `number' refers to the most important number in a company's quarterly
earnings report, the bottom-line figure of the earnings per share. It's a
number investors are obsessed with, and Berenson says it represents the
short-term mind set that infected Wall Street and corporate America in the
late '90s. I asked him to explain how the number is calculated.

Mr. ALEX BERENSON (Financial Investigative Reporter, The New York Times):
The base number, the number that the company reports, is its actual earnings,
what its sales were, what its costs were. You know, you sort of net those two
things. You subtract cost from sales and you get profits. And right now
actually we're in the middle of corporate earnings season. Companies like GE
and like Microsoft are reporting their profits right now, saying, `We made,
you know, X billion dollars in the first quarter, and we have, you know, Y
billion shares outstanding, so it works out that we made 25 cents a share, or
we made 63 cents a share.' And then Wall Street looks at that number and
compares it to what analysts had forecast earnings would be.

So, for example, if Microsoft made 25 cents a share and the estimate was 22
cents a share, everyone says, `Oh, this is wonderful. This is a great quarter
for the company. The future is bright. It's a new day dawning. Buy. You
know, buy, buy, buy.' And the stock goes up. It can go up significantly.
Certainly in the late '90s stocks often went up very significantly if you beat
your estimates. And then if the estimate was 28 cents and they report 25
cents, all of a sudden the sky is falling and the company's stock can be
absolutely penalized. And, you know, if this happens too many quarters in a
row, suddenly the CEO is out, and it's time for a, you know, change.

GROSS: Now you said that although the number is used by investors, and it's
considered to be very important, it's a lie. In what sense is it a lie?

Mr. BERENSON: Well, it's a lie because it's very hard for a company to
actually calculate its earnings over any three-month period. It's a lie
because you have to--people imagine that, `Well, you know, I know how much I
make and I know broadly how much I spend, so I know whether I'm saving money
or whether I'm, you know, going deeper into debt. And so it should be pretty
easy for a big company to do the same thing.'

In reality the level of detail and complexity that goes into a corporate
earnings report, a quarterly corporate earnings report, is almost unfathomable
to the average person. You have to estimate hundreds and hundreds of
different variables. You have to determine whether or not you actually made a
sale, whether you actually got paid, whether, you know, the truck that you own
went down in value by $500 or $700. And, you know, you multiply that by
20,000 trucks, and all of the sudden you're talking about some real money.

And so to believe that a company knows to the penny, you know, or even to the
million dollars, if it's GE, exactly what it made in a quarter is a lie. And
people used to, I think, understand that a bit more because it used to be that
analysts estimated earnings within a range. They would say, `Well, a
company's going to make $1.90 to $2.00 this quarter. And so if the company
made $1.91, it was OK. If the company made $1.99 it was OK. But when you
have a consensus estimate, you can't have a consensus range estimate. You
have to have a consensus estimate that's to a point, to a penny. And so it
became, well, Wall Street thinks the company's going to make $1.94 this
quarter, and all of the sudden if you made $1.92, it wasn't so good. And if
you made $1.97, things were great, which is a silly way to think about things.

But, unfortunately people--you know, investing is complicated and difficult,
and people like sort of simple maxims. And this became the overriding maxim:
Did you make your number? Did you meet estimates? Are things good or bad?
And so there was increasing, growing pressure on companies to make sure they
did make their numbers. And because there's variability in accounting,
because it's fairly simple in any one quarter to make a minor adjustment here
or there so you can make sure you made your estimate, then companies did start
to cheat. And the companies that were cheating already cheated more.

GROSS: And when you say cheating, you, in part, mean creative accounting.

Mr. BERENSON: I mean, there's all kinds of cheating, but yes. I mean selling
stuff when you don't actually think you're going to get paid but counting it
as a sale and booking a profit from it. I mean marking up your pension fund
more than you actually can make on it and booking that as a profit. There's
dozens, literally dozens, of major ways that companies can play with the
rules. There's something called GAAP, Generally Accepted Accounting
Principles. But within GAAP there's a lot of variability, and there's stuff
that is in the gray area of GAAP, and there's stuff that's clearly beyond
GAAP. And then there's stuff that's, you know, probably illegal, you know,
not just a violation of GAAP, but really a violation of the securities laws.
And then there's stuff that's definitely illegal. So there's a wide
continuum. But I would say that almost every company, by the late '90s, was
at least pushing the boundaries of GAAP.

GROSS: Accounting is, in some ways, an exact science. You know, it's an
empirical approach to figuring out profits and losses. On the other hand,
there's a lot of subjectivity in actually making those evaluations when you're
talking about big corporate accounting. And one of the areas where there is a
lot of subjectivity within the analysis is in something called accrual
accounting. Can you explain what accrual accounting is and why so many
corporations really need to use accrual accounting?

Mr. BERENSON: Sure. Just about every big company uses accrual accounting
because what it is supposed to do is match your expenses and your sales not
based on when the cash comes in but based on when a sale is actually made or
when you actually have an expense related to a specific product. So what
you're trying to do is give people a real picture of how the business is
running because there are going to be times when you're appearing to be
profitable when you're actually spending cash and, in fact, when you're going
to be profitable but your cash is flowing out. Let's say you're building a
new plant because demand is so big for that new car you just introduced.
Well, you have to spend money for that plant. So if you were just counting
cash flow, it would look like you were losing money, but that's not actually
what's going on in the reality of the business. The reality of the business
is that things are good and you're making money. And that's what accrual
counting is supposed to measure.

People generally think about their own finances on a cash basis. The cash
comes in, you know, and fairly rapidly it flows out. It flows out to credit
card companies, or it flows out to a restaurant. And you get paid on a
monthly or a weekly or a biweekly basis, so it's pretty easy for you to match
your cash flows. But for companies it's a lot more complicated, and accrual
accounting is supposed to measure that complexity.

Unfortunately, it is an art as well as a science because sometimes it's not
clear that you've made a sale that you're going to get paid for. Sometimes
you might be talking to a customer and they say, `Well, we'll take your
product, and we think we're going to buy it, but we want to test it out, and,
you know, we want the ability to return it. Well, that is not really a sale,
you know, under any accounting, under accrual accounting. You shouldn't book
that as a sale. But if you're short on your quarter and that one sale might
get you there, you might say, `Well, let's count that as a sale, and we'll
just write our customer a letter saying, "You know what? You can return that
if you want. We'll give you a letter on the side, but we won't put that in
the contract, and we'll tell the accountants that's a sale."' That's the kind
of thing that shouldn't happen but does happen and accrual accounting allows
to happen.

GROSS: We've been talking a little bit about creative accounting practices
that sometimes cross the line and mislead investors. Who's supposed to be
making sure that that doesn't happen, that the accounting and the quarterly
reports are as accurate as possible?

Mr. BERENSON: Well, the two main outside groups that are supposed to keep an
eye on things are the accounting industry itself, which is--you know, if
you're a CPA, that means you're a certified public accountant, and
theoretically you don't just have responsibility to the company; you have a
responsibility to the shareholders as well; and then the SEC, the Securities
and Exchange Commission, which was created in the '30s after the first, you
know, sort of huge bubble and bust in American markets in the 20th century,
you know, the 1920s boom that led to the '29 crash that a lot of people felt
led to the Depression.

So you have the SEC and you have the accounting industry, and unfortunately
neither of those groups is quite as strong as we all would have liked to
think. The accounting industry has a big structural problem, and that is that
it is paid by the company. You know, it's hired by executives. It's paid by
the company. And yet theoretically it's responsible to shareholders. And so
it's really trying to serve two masters. During the '90s you definitely saw a
change in accounting culture, whereas, you know, certainly in the '50s and the
'60s and the '70s these really were guys with green eye shades. They didn't
think of themselves as salesmen. They didn't like to have to go out and pitch
business.

By the '80s and certainly by the '90s, there was a new breed inside accounting
firms, and some of these people were not even accountants at all. There were
a lot of consultants at the firms. The firms had gotten a lot bigger. They'd
gotten to be more like companies and less like partnerships. And so the
traditional accountant was sort of overwhelmed. And, you know, when you're a
consultant, your job is to sell, and the way you sell to your customer, you
know, if your customer is an executive, is not by telling him, `You can't do
that. That is not allowed under Generally Accepted Accounting Principles.'
The way you do it is by saying, `Well, let's find a way to make this deal
work. Let's find a way to make that transaction profitable for you. Let's
find a way that you can do this and report a profit.' And that happened a lot
in the accounting industry in the 1990s.

And I think only now are we seeing how badly the industry was corrupted from
the inside. And only now, I think, are accountants beginning to say, `We do
have some professional responsibilities that maybe we didn't pay enough
attention to in the late '90s.' But honestly I'm not seeing as much of it
from the industry as I would like. You have not seen the CEOs of the major
four accounting firms that remain talking about their responsibilities that
much. You know, I think the accountants, for 100 years, have really tried to
avoid facing this dilemma of being paid by companies while serving investors
head on, and it's going to take a long time before they face up to it.

GROSS: Now what about the SEC? What is the SEC supposed to be doing to
regulate financial reports and to make sure that they're accurate?

Mr. BERENSON: Well, the SEC is the last line of defense. The SEC--you know,
its role is not to supervise every deal made by a public company. Its role is
not to examine the books of every company every year. But its role is to make
sure that in cases where there is fraud or where there is egregious behavior
that it steps in. Its role is to be the policemen of the securities markets.
But, unfortunately, the SEC just did not have the resources to carry that role
out in the late '90s. It had 3,000 employees, which is twice as many
employees as it had had 60 years before, and the markets are far larger and
more complex than they were 60 years ago. They're far larger and more complex
than they were 20 years ago.

In addition, the SEC paid less than private law firms, than private accounting
firms. And so, you know, really talented people at the SEC would say, `Well,
I can make, you know, X at the SEC or I can make five-X if I go work for a law
firm.' And eventually that's a pretty hard decision to make to sacrifice that
so you can work for a government agency, especially if you feel like you're
not getting the resources that you need to prosecute big cases.

So by the late '90s the SEC was pretty much overwhelmed. There's a great
quote from a Republican congressman--I believe it was in '98 or '99--and he
said, `Well, I think the SEC is doing a great job and doesn't need any more
resources. Look at how many people are investing in the markets.' To me
that's the same logic as saying, `Well, look at how many people are flying.
Clearly we can cut the FAA's budget.' And yet that was the logic of the late
'90s.

GROSS: My guest is Alex Berenson, author of the new book "The Number." More
after a break. This is FRESH AIR.

(Soundbite of music)

GROSS: My guest is Alex Berenson, author of the new book "The Number: How the
Drive for Quarterly Earnings Corrupted Wall Street and Corporate America."

We talked a little bit about accrual accounting and how that could be used,
you know, kind of creatively to make it seem like you've made more profits
than you really have. Can you just like run through quickly some of the other
practices that you think contributed to the kind of faking of the number, of
the bottom line in the quarterly reports?

Mr. BERENSON: Sure. I mean, the two biggest are that companies count a lot
in their pension income as operating income. So that means essentially
because the stock market was going up, companies were able to report stronger
profits, and that obviously helped the stock market to continue to go up, you
know, which sort of starts to smell like a Ponzi scheme. Another huge factor
is stock options and the fact that stock options are not counted as an
expense. And people who really know accounting, like Warren Buffett, think
that this is a joke, that stock options are certainly a compensation expense.
They're given to employees because they're valuable. And it seems ludicrous
that you wouldn't have to count that as an expense. And yet companies did not
count it as an expense.

And then there's a variety of smaller tricks companies can do. They can sort
of try to capitalize expenses, which means you spend money now but you say,
`Well, this is really for the future,' even if you can't really demonstrate
any benefit in the future from it. But you just stick it on your balance
sheet instead of counting it as an expense. And there's a lot of other
smaller tricks companies can use.

If I can go back to the stock options for just a second, though, to me that is
another major contributing factor to the rise in accounting fraud in the late
'90s because what stock options did is they very closely tied CEO pay and
executive pay to the performance of stock price. And in one way that's a good
thing. You want your CEO to be thinking about his stock price a little bit.
You don't want him to be making bad investments. You don't want him to be
wasting shareholders' money. But when you have a situation where the stock
goes up for one year or two years, the CEO can make $50 million or $100
million, really life-changing amounts of money. Then, you know, he or she is
going to be incredibly tempted to do whatever is necessary to make sure that
stock price goes up and stays up long enough for him to cash out.

And I don't think it's any coincidence that the biggest frauds of the late
'90s, the biggest accounting scams, are generally companies where the CEOs
took home 50 or 100 or in some cases several hundred million dollars from
stock options.

GROSS: What do you think investors can do to be more confident of the numbers
in the quarterly reports?

Mr. BERENSON: You know, it's a hard question because unless you have a CPA or
a CFA, you're a chartered financial analyst, it's pretty tough to go through
all this stuff and read it with a fine-toothed comb. There's a few things you
can do, though. You can make sure you're diversified so that, you know, your
life savings is not all in one company, especially if it's the company that
you work for. That's a really big mistake, you know, the people at Enron
made, some people at Tyco made, people at other big companies where there's
been accounting blowups have made, because in some cases the company's going
to have to lay people off just at the same time its stock is going down. So
that's a really bad thing obviously to have happen to you.

You can also say to yourself, `Does what this company's doing make sense?'
You know, people with Enron could never really understand how it was making
money, and yet they continued to invest in it. Tyco, which is a company that
I've written about, is a roll-up, and roll-ups meaning that it bought a lot of
smaller companies. It mainly grew by acquisition, not internally. And
roll-ups have a long history of blowing up because there's a lot of accounting
games you can do whenever you buy a company. It's one of the easiest ways to
cheat--is in taking over another company.

And yet the guys from Tyco said, `Well, we do it differently. We're not like
other conglomerates. We're not like other roll-ups. We really know how to
run these businesses.' And you have to ask yourself, `You really know how to
run five different kinds of businesses better than the existing management,
and that's why your profits are so strong?' You know, that story just didn't
make sense. Bnd yet because the accounting profits were there, because Tyco
was able to get its accountants to sign off and show a steadily rising
earnings stream, people just bought it. And so if the business does not make
sense to you, you should stay away from it. Now naturally sometimes that
might cost you some money you might not invest into some great company
because, you know, it was a little more complicated than you could understand.
But in the long run investing is complicated, and it's your money and you
really need to be careful before you decide to put it into a company.

GROSS: Is there any more regulation you would like to see the SEC do of
accounting and reporting?

Mr. BERENSON: I would like to see the SEC be funded in a way that it can
carry out its responsibilities. I think we have the structure in place, and
we also have something new called the Public Company Accounting Oversight
Board, which was brought into law last year as part of Sarbanes-Oxley, the
legislation that was passed over the summer of last year. And hopefully
Sarbanes-Oxley, which strengthened the penalties for companies that commit
accounting fraud, and the Accounting Oversight Board will combine to
strengthen a system that is pretty strong as long as the resources are devoted
to it.

What's been fascinating to me about this is I don't consider myself an
ideologue particularly, and yet my book has generated some heat from the right
because there's definitely a conservative ideology that the market is always
right and that regulation is a mistake almost at any level. And, you know, I
think we've had too much of that philosophy in the last few years. And I
think regulation is an important part of making markets work.

I think CEOs do respond to incentives. I think if they see a high risk of
getting caught and relatively low rewards because they don't have huge stock
options, they're less likely to cheat than if they see no risk of getting
caught and huge rewards. And so I think as important as the regulatory
structure is having the resources to make that real. Otherwise it's just sort
of dusty laws that are not enforced.

GROSS: Well, thank you so much for sharing some of the things you've learned
in the past few years. Thank you very much for talking with us.

Mr. BERENSON: Thanks, Terry. And thanks for having me on.

GROSS: Alex Berenson is the author of the new book "The Number." He's a
business reporter for The New York Times.

I'm Terry Gross, and this is FRESH AIR.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Interview: Harry Shearer discusses the mockumentary "A Mighty Wind"
TERRY GROSS, host:

This if FRESH AIR. I'm Terry Gross.

(Soundbite of song)

Unidentified Group: As I travel down the back roads of this home I love so
much...

Group of Women: Every carpenter and cowboy...

Group of Men: ...every layman on a grudge.

Unidentified Group: They're all talkin' about a feeling, about a taste that's
in the air. They're all talking about this mighty wind that's blowin'
everywhere. Oh, a mighty wind's a-blowin'. It's kickin' up the sand. It's
blowin' out a message to every woman, child and man--every man. Yes, a mighty
wind's a-blowin' 'cross the land and 'cross the sea.

GROSS: Three folk music groups from the '60s reunite for a concert that will
be broadcast live on public television. That's the premise of the new folk
music satirical film "A Mighty Wind."

My guest, Harry Shearer, co-stars as the bass player and bass singer of the
trio The Folksmen. The two other members of the group are played by
Christopher Guest, who also directed and co-wrote the film, and Michael
McKean. These three actors also starred in the heavy metal mockumentary "This
is Spinal Tap." They first performed as The Folksmen 18 years ago. In fact,
The Folksmen have opened for the band Spinal Tap, confusing the heck out of
some people in the audience.

Harry Shearer also does many of the voices on "The Simpsons," including Mr.
Burns, Smithers and Ned Flanders, and he hosts "Le Show," a public radio
program of political and cultural satire.

Here's a song from "A Mighty Wind's" soundtrack CD, a song that isn't included
in the film, The Folksmen's cover version of a Rolling Stones hit.

(Soundbite of music)

THE FOLKSMEN: (Singing) If you start me up, start me up, if you start me up,
I'll never stop. If you start me up, start me up, if you start me up, I'll
never stop. I've been running hard, running hard. You've got me ticking.
Going to blow my top. If you start me up, start me up, if you start me up,
I'll never stop. You make a grown man cry, cry. You make a grown man cry,
cry. You make a grow man cry.

Without the oil, the gasoline, I walk smooth. She's a mean, mean machine.

GROSS: Harry Shearer, welcome back to FRESH AIR.

Mr. HARRY SHEARER (Writer; Actor; Director; Comedian; Host, "Le Show"):
Thanks, Terry.

GROSS: So describe The Folksmen and the groups that that group is most
modeled on.

Mr. SHEARER: Well, The Folksmen is a trio. We're hirsute in all the wrong
places. And we fancy ourselves probably the most purest of the second or
third wave of folk acts that actually hit the charts. Everybody in this film
is of the era of folkies that actually were trying to make hit records as
opposed to going down and recording field hollers in Alabama. So we look down
probably on everybody else in this film.

The obvious guess that most people make is Kingston Trio, but there's a little
bit of Peter, Paul & Mary in this, there's a little bit of Brothers Four,
although we're missing a brother, groups like that, you know? We're trying to
straddle a line between good timey and, `No, we're really saying something,'
but, of course, we're really saying nothin' and it's not that good a time.'

GROSS: Now, as you were saying, The Folksmen, you know, think of themselves
as like the non-commercial band, the more real folk band...

Mr. SHEARER: Mm-hmm.

GROSS: ...and they do...

Mr. SHEARER: And, of course, the public agrees with them.

GROSS: Right. So I thought we'd play two versions of a song that you
co-wrote called "Never Did No Wanderin.'"

Mr. SHEARER: Mm-hmm.

GROSS: And we'll have The Folksmen version, and then we'll have like the more
commercial version by...

Mr. SHEARER: Yeah. The toothpaste commercial.

GROSS: ...yeah--The New Main Street Singers. But, first, tell us the story
of writing the song.

Mr. SHEARER: Well, the writing process was really, as every other part of the
process of making this movie, totally different from the normal Hollywood
scheme. Chris--Chris being the director--didn't have a list of songs he
needed and then call us up and just go, `I need this, this, this and this,'
and we did it to order. We really were like kind of making up the songs based
on what we thought, you know, groups needed and what was funny about this kind
of folk music.

So Michael McKean and I were at my house one day, and I dug up an old record
of the "Hootenanny" program. It was a prime-time series on ABC featuring folk
music--that's how commercial it got--hosted by that old folkie himself, Jack
Linkletter. And we were listening to a track by--tell me how folkie this
group name sounds--The Yachtsmen(ph). And something in the song triggered us
to start saying, you know, `We need a song about rambling. Everybody's got a
rambling song.' That's the one of the great cliches of folk music is a
rambling--`I've been rambling. I've been going here and there.' And I
started doing a little bass riff, and Michael and I started playing, and then
we just thought, you know, `The comic twist on this is a guy who never did no
rambling, never did no wandering.'

GROSS: OK, which leads us right into the song. So first The Folksmen
version, the pure version, and then the commercial sellout version, The New
Main Street Singers. And this is from the soundtrack of "A Mighty Wind."

(Soundbite of "Never Did No Wanderin'")

THE FOLKSMEN: (Singing) My mama was the cold north wind and my daddy was the
son of a railroad man from west of hell where the trains don't even run.
Never heard the whistle of a southbound freight or the singing of its drivin'
wheel. No, I never did no wanderin', never did no wanderin', never did no
wanderin' after all.

THE NEW MAIN STREET SINGERS: (Singing) Wanderin'. Never did no wanderin.'
My mother was a cold north wind. My daddy was the son of a railroad man from
west of hell where the trains don't even run. Never heard the whistle of a
lonesome freight or the singing of its drivin' wheel. No, I never did no
wanderin', never did no wanderin', never did no wanderin' after all.

GROSS: That's two versions of "Never Did No Wanderin'" co-written by my
guest, Harry Shearer, one of the stars of the new folk music mockumentary "A
Mighty Wind."

Did you ever go through a folk music period yourself?

Mr. SHEARER: Not really. Christopher played folk music. Christopher played
bluegrass as a youngster, which is, I guess, one of the purest forms of folk
and/or country music, just really relies on very good playing, among other
things. But, you know, I remember this music sort of swirling around me when
I was in college, but I was sort of a diehard Frank, Ella, Mel Torme guy. So
I'd hear this music, and every once in a while I'd hear like a weird chord in
a Kingston Trio song and go, `Hmm, they've been listening to The High-Lows.'

GROSS: Right.

Mr. SHEARER: But aside from that, you know, this wasn't my music.

GROSS: Well, The New Main Street Singers have some very High-Lows kind of
harmonies.

Mr. SHEARER: Yes, they do. Well, John Michael Higgens, who performs as the
leader of it and is also the vocal arranger of that, has that kind of ear. He
grew up listening to--he said to me once--he's the first person who ever said
to me, his experience being the same as mine, `I just listened to
arrangements. If I heard a good arrangement, I didn't care what kind of music
it was.' So he has this ear for great arrangements, and he just throws all
these sixth and seventh chords in where they don't belong just for the fun of
it.

GROSS: Well, you weren't used to singing folk harmonies. I mean, that's not
the kind of harmonies you'd sing in Spinal Tap.

Mr. SHEARER: No. But, you know, they're sort of in everybody's head, I
guess, or at least they were in all of our heads. That wasn't nearly as much
work as--you know, everybody in this movie, or almost everybody, either picked
up a new instrument or had to relearn--Gene Levy hadn't played a guitar in 30
years; Higgens had never played a tenor guitar; Catherine O'Hara had never
played the Autoharp; and Parker Posey learned the mandoline for this movie.
So there was a lot of picking and learning going on, and, you know, a lot of
trust by Christopher to believe that everybody would--'cause he recorded the
music live in the concert sequences--be ready on that day to be in concert
form. It's emblematic of the trust he showed us all through the making of the
picture.

GROSS: My guest is Harry Shearer. He's one of the stars of the new folk
music satire "A Mighty Wind." More after a break. This is FRESH AIR.

(Soundbite of music)

THE FOLKSMEN: (Singing) Wiley. First Mate Peter's a hardened man.

GROSS: My guest is Harry Shearer. He's one of the stars of the new folk
music satire "A Mighty Wind." He also does many of the voices on "The
Simpsons," and he's the host of "Le Show," a public radio program of political
and cultural satire.

So did you have to learn to play or sing in ways that you had never done
before?

Mr. SHEARER: I had to really get serious about the stand-up bass, the upright
bass. We had done these gigs from time to time, and I'd pick it up and just
whack away at it a bit and then put it down again. But we did--a couple of
years ago, before we did the tour with Spinal Tap, there was a show at Royce
Hall at UCLA. Hal Wilner put together a couple of evenings of a tribute to
Harry Smith, who was a folk music archaeologist I guess is the best way to
describe him. And everybody came and did songs that Harry Smith had found.
And we did three of our own songs because we couldn't be bothered to learn
any Harry Smith songs. And so everybody liked us because we were the
best-rehearsed people on the bill because we were doing our own stuff.

And I had rented this bass, and I just thought, as every amateur does,
`Doggone it, it must be me. I'm not getting enough sound out of this
instrument.' So I'd work harder and harder at it, and at the end of those
couple of gigs I had a real nice case of tendinitis. And that's when I
realized, `OK, I get it. I'll do what the real musicians do. I'll get a good
instrument first and get it set up the way I like it,' and then, you know,
really, I played it every day until we made the movie.

GROSS: OK. Time for another song.

Mr. SHEARER: Hmm.

GROSS: Here's another song by The Folksmen, and this is called "Old Joe's
Place.' And this is the song that actually charted for them.

Mr. SHEARER: This is our hit. It got to number 17.

GROSS: You co-wrote the song.

Mr. SHEARER: Yes.

GROSS: Tell us about writing it.

Mr. SHEARER: This was, I think, one of the first Folksmen tunes we wrote when
we did this piece on "Saturday Night Live," and the premise was this washed-up
folk group was, for some reason, getting a chance to appear on "Saturday Night
Live." And so you see them backstage before the show trying to decide whether
they should do their Spanish Civil War song or some, you know, song about a
real tragedy, a train wreck in a coal mine--you know, keep resisting the idea
of doing the obvious song, which is the only one everybody's ever heard of us.
And then, of course, we get on stage and do "Old Joe's Place," so that was the
gag. And it's a typical kind of good timey folk song where every time the
chorus comes around it gets longer.

GROSS: It struck me as very Burl Ives.

Mr. SHEARER: Yeah, I guess so. It's Burl something.

GROSS: OK. This is The Folksmen with my guest, Harry Shearer, "Old Joe's
Place" from the soundtrack of the folk mockumentary "A Mighty Wind."

(Soundbite of "Old Joe's Place")

THE FOLKSMEN: (Singing) Whenever I'm out a-wanderin', chasin' a rainbow
dream, I often stop and think about a place I've never seen, where friendly
folks can gather and raise the rafters high, with songs and tales of
yesteryear until they say, `Goodbye.' Well, there's a puppy in the parlor and
a skillet on the stove and a smelly old blanket that a Navajo wove. There's
chicken on the table, but you got to say grace. There's always something
cooking at Old Joe's Place. Now folks come by around evening time as soon as
the sun goes down. Some drop in from right next door and some from out of
town.

Unidentified Man: Pick it.

THE FOLKSMEN: Well, there's a puppy in the parlor and a skillet on the stove
and a smelly old blanket that a Navajo wove. There's popcorn in the popper
and a porker in the pot. There's pie in the pantry and the coffee's always
hot. There's chicken on the table, but you got to say grace. There's always
something cooking at Old Joe's Place.

GROSS: That's "Old Joe's Place" with my guest, Harry Shearer, doing bass
voice and playing bass as well. It's from the soundtrack of the film "A
Mighty Wind," the new folk mockumentary.

What else did you listen to? You mentioned going back and watching old
episodes of "Hootenanny."

Mr. SHEARER: Yeah.

GROSS: What else did you try to immerse yourself in to prepare for your role,
to get into character?

Mr. SHEARER: Well, I can't tell you about some of it because it will give
away a big joke at the end. Suffice to say there was a piece that aired on
NPR a few years back that I cherished for its unintentional comic value, and I
went and reviewed that for that joke.

But there's a wonderful documentary about The Weavers, which focuses around a
Weavers' reunion. And since we were going to be reuniting after a long
absence, we all looked at that as sort of a template for, you know, the
behavior of these guys. I listened to a lot of--I, sadly, in my extremely
eclectic and never-surrendered LP collection, have a lot of folk records that
I had never had occasion to listen to till now for, you know, singing style
and things like that.

But in terms of character, I didn't do--yeah, I guess I did a little bit of
research on guys in groups and just saw what their career trajectories were
after the `folk music scare,' as Martin Mull calls it, evaporated just to see,
you know, how paths went before I kind of contributed my little bit as to what
Mark Shubb, the character I play--what his life had been since The Folksmen
broke up.

GROSS: My guest is Harry Shearer. And in the new folk music mockumentary "A
Mighty Wind" he plays the bass player and bass singer with the folk group The
Folksmen. He co-wrote a lot of the songs in the movie. Harry Shearer also
hosts the public radio show, a political satire, "Le Show," and he does a lot
of voices on "The Simpsons" and has been in a whole bunch of movies.

I know this isn't the first time that you've had to do satire about something
as dangerous as war. But, you know, what's it like for you, you know, when
you're in the middle of war, when you're facing war, to then have to find the
funny part?

Mr. SHEARER: Well, actually this was much easier than doing what I do in the
immediate wake of 9/11. I think that had a much more traumatic effect on a
lot more people in the audience. And I just thought that was a more
challenging environment.

You know, this is another one of our remote-control wars that we're kind of
getting very good at. And the main difference was that, as with 9/11, some of
my affiliates, some of them in a town very near to you, Terry, would start
pre-empting me as soon as things got serious, you know. And my reaction was,
`Hey, wait a minute. I'm doing material on this subject, too, you know? I'm
not doing my Pamela Anderson material right now. And it maybe is valuable for
people to hear this at this time.'

Otherwise, you know, you just get far more inundated in terms of the media
input. And I found myself watching and listening and reading to way, way more
stuff than I do normally to try to keep up because, you know, when the news
channels here--here's an odd moment--all news, then you have to kind of look
behind what they're doing or look around what they're doing to see what else
is going on. So I just found myself kind of obsessing on it, as I would
normally anyway, but the radio show is just a way to have an excuse for the
obsessions.

GROSS: My guest is Harry Shearer. He's one of the stars of the new folk
music satire "A Mighty Wind." More after a break. This is FRESH AIR.

(Soundbite of music)

GROSS: My guest is Harry Shearer. He's one of the stars of the new folk
music satire "A Mighty Wind." He also does many of the voices on "The
Simpsons," and he's the host of "Le Show," a public radio program of political
and cultural satire. When we left off, we were talking about the satirical
sketches he did on the show during the war in Iraq.

Why don't we hear an excerpt of one of the sketches that you did? And this is
"Extra Access Tonight," which is your version of "Access" or "Extra" or
"Entertainment Tonight," "Access TV."

Mr. SHEARER: Mm-hmm.

GROSS: Yeah. So this is them talking about how the war news is affecting
television and the Academy Awards.

(Soundbite of "Extra Access Tonight")

Mr. SHEARER: (As host) If it's wartime, this must be Tuesday, and television
programmers are adjusting at a pace that must be stimulating `shock and awe'
in the competition. The Motion Picture Academy decided that the first victim
of this war was the red carpet arrival ceremony, leaving Oscar preshow hostess
Joan Rivers dishing her heart out.

(As Joan Rivers) I mean, it's a great carpet. I mean, what are you supposed
to do with that? That's for the dignity. I mean, yeah, if they wanted
dignity, they should have told Courtney Love to stay home. OK, she's not
really as the Oscars, is she? I mean, but what are we supposed to say as
these people arrive? Ah, can you believe that gray suit? Oh, oh, my God,
those lapels are notched! I mean, you know, it's all right for me;.I have a
career. But poor Melissa.

(As host) Co-executive producer Jaime Melarkin(ph) is making last-minute
changes in NBC's hit reality show "Fear Factor."

(As Jaime Melarkin) All the insect-related stunts are out for the duration of
the hostilities. We've been banking less-disgusting challenges for just a
situation like this. This week the contestants all have to eat sweetbreads.
You know, it's still like, `Yick!' but it's a classier kind of yick.

(As host) On the news of the networks, the competition heats up in wartime.
We talked to CNN's Aaron Brown.

(As Aaron Brown) In terms of the people over there, everybody's, you know,
sent their `A Teams.' So it is really a contest about in the chair next to
the anchor who's got the best former generals. And I just happen to think our
former generals are top of the line.

(As host) Not surprisingly, Dan Rather has a different take on the war, the
network war.

(As Dan Rather) I'll tell you this, CBS News, as a gold-standard-type
television news operation, has--we've got two mandates that we're crippled
critter serious about, do the best possible electronic journalism about this
conflict, real pedal-to-the-metal journalism, and, two, make rock-solid sure
for certain that we don't put the Howard Stern prank caller on the air
anymore.

(As host) For the networks, there's one...

GROSS: That's an excerpt of a sketch from Harry Shearer's public radio
program "Le Show," with Harry Shearer doing all the voices.

Mr. SHEARER: That's a good example, Terry, of how one can work comedically in
times that people might think, (in low voice) `Well, this is a little serious.
This is a little dramatic. What are you going to do? Make fun of the
killings?'

No, the media, one way or another, is always ripe for satire at times like
this, (as Aaron Brown), especially people like Aaron Brown who has been a
particular bete noire of mine lately, as I think you may know. It is...

GROSS: That's Aaron Brown from CNN. Why is...

Mr. SHEARER: ...Aaron Brown from CNN.

Well, you know, first of all, Aaron Brown--one trick I've learned is you kind
of try to figure out who--if you're trying to do somebody, get a character,
you try to figure out whom they're doing. I realize when I was trying to get
ahold of a character of the voice of Dick Clark that Dick Clark had actually
grown up listening to Arthur Gottfried(ph), and that kind of helped me figure
out how to (as Dick Clark) do Dick Clark. You know, 'cause Dick Clark has
this relaxed way of talking, and I thought, `Who was he listening to?'

GROSS: That's great. That's really interesting.

Mr. SHEARER: And with Aaron you can hear he spent way too much time watching
Ted Koppel because Ted Koppel will never say, `It's.' He'll always say, (as
Ted Koppel) `It is a,' (in normal voice) you know, to kind of focus you on the
thing he's going to say. And Aaron has, (as Aaron Brown) `It is a very hard
hard story we have to,' (in normal voice) and then, of course, it's just his
insane self-obsession, like we care how hard it was for them to do the story,
you know. (As Aaron Brown) Andrea Koppel, you've had a long day. Take the
rest of the night. (In normal voice) Do that on e-mail; don't waste air time.

GROSS: That dates back to "Entertainment Tonight," I think, 'cause that's the
first time, like, years ago on "Entertainment Tonight" when people would be
complimenting, `Leonard, that was an excellent film review.'

Mr. SHEARER: Oh, God.

GROSS: `Thank you for that.'

Mr. SHEARER: Well, it actually, goes to, I think, before that to local news
where they were just told to chat with each other. And, `Bill, good weather
tonight. That's a good-looking forecast. I'd change that suit jacket,
however.' That stuff, you know. Everything bad started with local news.

GROSS: Mm-hmm. Well, Harry, I think we'll close with a great sketch that you
did of the Larry King show. Do you want to say anything about this sketch
before we hear it?

Mr. SHEARER: The guest has been on with Larry before. Right after 9/11 he
premiered a song that he had called "Where's Your Flag?" which was just
challenging businesses. He was saying he wasn't going to go into any business
that didn't have a flag in the window.

And I told you this off the air. My favorite story ever about being
recognized was when I was flying into San Francisco Airport recently, and I
was in the men's room just washing my hands, you know, because of the epidemic
and everything. And you don't like to be approached when you're in the men's
room. But a guy walked up to me sending very strong non-stalker vibes and
just said two words to me, (in other voice) `Duey Gordon(ph),' and it broke me
up, so.

GROSS: That's great. Well, Harry Shearer, it's been great to talk with you.
Thank you so much.

Mr. SHEARER: Terry, it's always a pleasure.

(Soundbite of "Le Show")

Mr. SHEARER: (As announcer) CNN coverage of the war in Iraq continues with a
special edition of "Larry King Live." Now here's "Larry King Live."

(As Larry King) We're in Lexington, Kentucky, tonight where I'll be emceeing
the Mint Julip Ball(ph) for the benefit of the Pulmonary Edema Foundation
Monday night. Coming up next hour, our own Aaron Brown discusses his
anxieties about the war with Dr. Phil.

But right now in our Los Angeles studio an old friend of "Larry King Live,"
even though he's young enough to be my son from my fifth marriage. He first
hit the spotlight with the boy band Boys 'R' Us(ph). He's been on his own now
for a couple of years building his solo career. And he's with us tonight
because--well, he's going to tell us why he's here tonight. That's why he's
here. The fabulous Duey Gordon.

(As Duey Gordon) Good evening, Larry. Thanks for having me back.

(As Larry King) Yeah.

(As Duey Gordon) I know it's wartime and I'm no general or journalist or
anything, but...

(As Larry King) Well, you know, Duey, I think people want to know about the
affect of the war on the ordinary celebrity, even Ma.

(As Duey Gordon) Well, I hope so, Larry.

(As Larry King) Yeah.

(As Duey Gordon) As you know, I don't think an artist has to keep his heart
off his sleeve all the time. I think you remember I was involved in the whole
post-9/11 patriotism thing before it was even a bandwagon. So...

(As Larry King) No. You're song "Where's Your Flag?" was toppin' the charts
right up till the promotion...

GROSS: Harry Shearer from his public radio program "Le Show." He's one of
the stars of the new film "A Mighty Wind." I'm Terry Gross.

We'll close with a recording by Nina Simone. She died yesterday at the age of
70. This is her 1967 version of the Bob Dylan song "I Shall Be Released."

(Soundbite of "I Shall Be Released")

Ms. NINA SIMONE: (Singing) They say everything can be replaced. They say
every distant sea is not near. So I remember every face of every man who put
me here. I see my life come shinin' from the west down to the east. Any day
now, any day now, I shall be released. They say every man needs protection.
They say every man must fall.
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