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Bush to get tough on corporate abuse

Bush pulls in a striped bass hooked by his daughter Jenna near the Bush family retreat Sunday in Kennebunkport.  

From Kelly Wallace
CNN Washington Bureau

KENNEBUNKPORT, Maine (CNN) -- In a speech Tuesday on Wall Street, President Bush is expected to call for criminal penalties -- including jail time -- for corporate leaders who knowingly misreport their company's earnings.

Democrats and Republicans both say tougher penalties are needed to calm jittery investors.

"As soon as one or more of these major corporate figures is indicted and convicted for the thievery that occurred at the expense of the American investor, I think confidence will gradually come back," said Rep. Billy Tauzin, R-Louisiana, chairman of the House Energy and Commerce Committee.

Bush was expected to highlight proposals he has already unveiled, including giving the Securities and Exchange Commission the authority, without going to court, to ban corporate officers who abuse their power from serving on corporate boards, a senior administration official said.

The president will also describe the SEC's efforts to seize any financial gains corporate leaders make based on fraudulent information.

Bush was expected to charge that the excesses of the early 1990s -- during the Clinton administration-- contributed to corporate abuses, a point his economic team has made in recent weeks, a senior administration official said.

Democrats stepped up their criticism of the Bush White House Sunday, accusing members of the president's team of being too cozy with big business.

Senate Majority Leader Tom Daschle singled out Harvey Pitt, the former securities industry lawyer who is now the head of the SEC. Daschle stopped just short of calling for his resignation.

"I'd have to say that we could do a lot better than Harvey Pitt in that position today," said Daschle, calling Pitt a "huge disappointment."

"That cozy, permissive relationship has to end, and he in large measure has orchestrated that over he last 18 months," Daschle said. (Full story)

The White House countered by saying the SEC under Pitt's watch has prevented more corporate officers from serving on corporate boards due to malfeasance than the SEC did in the previous years.

"Harvey Pitt is doing a great job and he has an incredibly strong record in terms of enforcement," deputy White House press secretary Claire Buchan told CNN.

White House press secretary Ari Fleischer said Daschle's charges "lack merit" and are politically motivated.

Rep. Michael Oxley, R-Ohio, chairman of the Financial Services committee, said Pitt has been "very aggressive."

"He moved very quickly" on the investigation of WorldCom, the telecommunications giant that admitted misreporting nearly $4 billion in earnings last month. "[It was] the fastest, really, in history that the SEC jumped in."

Democrats have raised questions again about Bush's controversial sale of Harken Energy stock in 1990 when he served on the company's board of directors. The sale came just two months before the company disclosed a major loss.

Daschle called on the White House to release all paperwork related to the SEC's investigation into the matter.

Asked whether the administration would release the SEC file, Fleischer said the matter is an "old issue" that the president's political opponents are trying to use against him.

Aides said the SEC looked into Bush's sale and took no action against him.

Bush plans to do some golfing Monday in Kennebunkport before heading back to the White House.




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