Bush pushes for tougher corporate rules
WASHINGTON (CNN) -- President Bush vowed Saturday to protect the economic security of Americans and called for new rules to enforce corporate responsibility, following this week's reports of large-scale accounting irregularities at WorldCom.
Calling WorldCom's revelations "deeply troubling" in his weekly radio address, which is pre-recorded, Bush noted that the Security and Exchange Commission immediately filed suit against the company to preserve documents.
The SEC's action should also ensure that a thorough investigation can take place, and the company cannot give massive payments to its executives during the probe, Bush said. WorldCom revealed this week that it had masked $3.8 billion in expenses, thereby inflating its pretax earnings.
Bush's concerns about WorldCom and other problematic companies also were addressed Saturday by Sen. Paul Sarbanes, D-Maryland, who delivered the weekly Democratic radio address.
"We are facing a crisis of confidence that is eroding the public's trust in our markets, and poses a real threat to our economic health," Sarbanes said. "The strain on the economy is deep and spreading."
Earlier this week, Bush sharply criticized WorldCom, which is set to lay off 17,000 employees due to its financial problems, and called the revelations "outrageous." (Full story)
On Saturday, he said he would press Congress to pass the 10-point plan he proposed in March to improve corporate responsibility, including forcing executives to lose all money they gain by fraud and serving jail time, if found criminally negligent.
"When bad accounting practices make the company appear to be more successful than it actually is, corporate executives should lose their phony profits gained at the expense of employees and stockholders," he said.
Bush's March proposal was prompted by the scandal involving energy giant Enron, which filed for bankruptcy last year -- the largest such filing in U.S. history.
Thousands of Enron employees lost their retirement savings when the company went under. Its accounting practices have been the focus of a Justice Department inquiry.
"Despite recent abuses of the public's trust, our economy remains fundamentally sound and strong, and the vast majority of businesspeople are living by the rules," Bush said in his radio address. "Yet, confidence is the cornerstone of our economic system, so a few bad actors can tarnish our entire free enterprise system."
Sarbanes, who chairs the Senate Banking, Housing and Urban Affairs Committee, pointed out that the panel last week passed bipartisan legislation targeting accounting reforms and investor protection.
"This bill strengthens corporate accountability and auditor integrity, addresses conflicts of interest, and protects employees, pension holders and investors against fraud and deception," Sarbanes added.
He said the bill may be considered by the full Senate the week of July 8.
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