Tuesday, July 09, 2002
Bush to call for strict penalties
Enquirer staff and news services
WASHINGTON President Bush, confronting corporate scandals that have undermined investor confidence and threatened political damage to the White House, will propose stricter regulation of businesses, including longer jail terms for executives who commit fraud.
Mr. Bush will speak on Wall Street today at a time of rising public anger over accounting scandals in some of the nation's biggest firms. He planned to detail his agenda for pursuing corporate lawbreakers in a luncheon speech Tuesday to the Association for a Better New York in Manhattan's financial district.
He will call for stiffer jail terms for those convicted of corporate fraud, administration officials said.
He thinks it's important for the economy that the American people have confidence in corporations, and his speech is going to be aimed at restoring that confidence, White House press secretary Ari Fleischer said as the president returned from a 3 1/2-day birthday weekend with his parents in Maine.
Lingering on the Maine coast for a morning golf game with his father, Mr. Bush waved away reporters' questions about the speech and did the same when asked about it on his return to the White House.
LOCAL VIEWS |
Cincinnati investment professionals Monday were divided on what the Bush administration needs to do to restore investor confidence:
A lot more regulation I think we need a few more rules, said Marilyn Osborn, vice president and portfolio manager at Bartlett & Co. Accounting firms haven't done a very good job of regulating themselves.
A little more regulation We have to have standards, said Ed Haberer, president of Haberer Registered Investment Advisors. The government has to get involved to provide the confidence the investors need to see.
No more regulation The message from Washington should be that they are doing their best to draw a clear distinction between out-and-out fraud and corporate exuberance, said Doug McPeek, managing director of Nottinghill Investment Advisors. I think the rules are there right now.
Better accountability We just need more enforcement of what we've got, said Declan O'Sullivan, president of O'Sullivan, Sims & Hogan. More regulations would just clutter things up and tend to slow down economic development. ... There needs to be better empowering and financing of the SEC.
During a late-afternoon news conference, Mr. Bush said that in the speech today in New York, he'd propose tough new laws to punish corporate abuse and restore investor confidence.
We have a duty to every worker, shareholder and investor to punish the guilty, close loopholes and protect employee pensions, and we will, he said.
The first president with a master of business administration degree faces a balancing act: boosting investor confidence while distancing himself from executives who are among his most ardent and monied political supporters.
The White House stood firmly behind Mr. Bush's chairman of the Securities and Exchange Commission, Harvey Pitt, as House members at a hearing on WorldCom called for Mr. Pitt's resignation.
The Senate was considering legislation to tighten oversight of the accounting industry. The White House planned to endorse the goals but not all the details of legislation introduced by Senate Banking Committee Chairman Paul Sarbanes, D-Md.
The Senate bill proposes an independent, five-member Public Company Accounting Oversight Board that would end the accounting industry's current system of self-regulation. The board would have authority to establish and enforce new standards on the industry.
Some business groups led by the U.S. Chamber of Commerce vigorously oppose the proposed independent board and fear public disclosure of sensitive and proprietary information about a firm's operations.
U.S. Chamber of Commerce President Thomas Donohue said Monday that the Senate bill is likely to pass because of what he described as a feeding frenzy by politicians anxious to respond to a distressed constituency.
If the Sarbanes bill clears the Senate, it faces yet another hurdle. It would have to be reconciled with the Corporate and Auditing Accountability, Responsibility and Transparency Act, a House-passed bill sponsored by Rep. Michael Oxley, an Ohio Republican and chairman of the House Financial Services Committee. The Oxley bill would create a new public regulatory board under the authority of the Securities and Exchange Commission. It gives the new oversight board fewer powers than Mr. Sarbanes' bill would.
The House passed the bill, 334-90, and it is favored by the administration.
The Senate legislation has created a fissure in the business community, with the influential Business Roundtable of corporate chief executives and a separate organization representing corporate chief financial officers publicly urging its passage.
We share the same goals, and I'm confident we can get a good piece of legislation out of Congress, Mr. Bush said.
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