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Bush presses Congress to act quickly on corporate fraud bill
By Lawrence L. Knutson, Associated Press, 7/20/02
WASHINGTON — President Bush appealed to Congress on Saturday for quick and decisive action to fight corporate fraud that has eroded trust in big business and cast a pall over the economic recovery that has cost investors money and workers jobs.
A Democratic leader on the issue agreed on the urgent need for legislation, especially considering Wall Street's sharp drop. "We're out to restore capitalism," said Sen. Paul Sarbanes, D-Md.
Sarbanes said congressional negotiators "want to get a system in place that will provide some assurances that these abuses won't happen again." He repeated on television his idea to create an independent accounting standards board to inspect and investigate the accounting industry and punish wrongdoers.
In his weekly radio address, Bush said the need for action is critical because "the trust of the American people has been betrayed."
Bush said there is no reason Congress cannot complete work on legislation before leaving for its August vacation. Sarbanes indicated efforts will be made to "try to get a bill done in the very near future."
The Senate plans to begin its recess Aug. 5 and return in early September. The House would like to leave as early as July 29. House and Senate negotiators met for the first time Friday to begin negotiating a final version of the bill.
As they work against the vacation deadline, their attention clearly will be on the stock market, where a 400-point sell-off brought the Dow Jones industrial average Friday to its lowest level in almost four years.
"Unethical business practices by corporate leaders amount to theft and fraud," Bush said in the radio address. "These practices are unacceptable, and we are fighting them with active prosecutions and tough enforcement" by the Securities and Exchange Commission.
"We will not accept anything less than complete honesty," the president said.
Both the Sarbanes-sponsored Senate bill and the Republican-sponsored House version would create new criminal penalties for business fraud and tighten oversight of the accounting industry but use divergent paths to get there. Advocates of the Senate bill contend it is the tougher and more effective version.
While most corporate leaders are honest, "clearly business has a very bad name right now," Sarbanes, chairman of the House Banking Committee, said on CNN. "Obviously we've had some very bad actors on the scene."
Sarbanes' prescription: Establish an independent oversight board for the accounting industry. Sever auditing from consulting services. Improve corporate governance. Tighten financial disclosure requirements. Strengthen the Securities and Exchange Commission.
Bush said both the House and Senate versions of the legislation would "toughen penalties and provide transparency and hold corporate executives accountable for their behavior."
Responding for Democrats, Colorado Attorney General Ken Salazar told a radio audience that the president and his administration "have only paid lip service" in their advocacy of a corporate cleanup.
"With their hands-off regulatory approach, they are the ones who gave the green light for this kind of corporate excess," Salazar said in a Spanish-language broadcast beamed to Hispanic audiences.
In his address, Bush said fundamentals of the American economy are strong, but "our free enterprise system is being tested."
"Unethical business conduct that began in the boom of the 1990s is being uncovered. Investors have lost money," he said. "Some in retirement have lost security. Workers have lost jobs."
Bush also urged Congress to speed up legislation authorizing the government to help subsidize terrorism insurance for commercial properties and to restore expired presidential authority to negotiate trade deals without congressional interference. Both chambers of Congress have passed versions of the trade bill, but a conference committee has not worked out a compromise final bill.
He also renewed a demand that Congress curb spending, hinting that he might veto bills that are too costly. "Unless Congress controls its spending, we will face a decade of deficits," Bush said.