Lawmakers call for corporate crackdown
In the wake of several Wall Street scandals, lawmakers say new rules are needed to ensure ethical business practices and to penalize those executives who engage in corporate misconduct. They say government action is needed to restore investor confidence and bolster the economy.
While Democrats and Republicans agree that changes are needed, the two parties differ in how far they want to go.
Democrats generally favor more stringent measures, while Republicans, particularly in the House of Representatives, want to give corporations more leeway.
The issue has political implications.
Some Democrats have raised questions about President Bush's 1990 sale of Harken Energy Corp. stock, which took place when he was a businessman and a member of the company's board of directors. The sale came two months before the company disclosed a major loss. Bush has said the matter was cleared years ago, and accuses political opponents of trying to use it against him.
The president outlined his ideas for corporate ethics in a speech Tuesday before Wall Street leaders. He called for an end to "cooking the books, shading the truth and breaking our laws."
In April, the House passed a reform bill, authored by Reps. Michael Oxley, R-Ohio, and Richard Baker, R-Louisiana, and the Senate has begun debate on its legislation, drafted by Sen. Paul Sarbanes, D-Maryland.
The House and Senate bills both call for a five-member accounting regulatory board overseen by the Securities and Exchange Commission. Both would bar insider stock sales during blackout periods, and each bill goes for greater corporate disclosure about off-balance-sheet transactions.
But the Senate bill would set some specific standards for the board, while the House measure leaves the question of standards up to the board, subject to SEC approval.
Unlike the House bill, the Senate legislation also would require chief executive officers and chief financial officers to vouch for the accuracy of financial statements.
The president has expressed his confidence that he can work with lawmakers to craft a strong bill, but Democrats say Bush's proposals have, so far, fallen short.
Sen. Paul Sarbanes: Maryland Democrat and chairman of the Senate Banking Committee
Rep. Michael Oxley: Ohio Republican and chairman of the House Financial Services Committee
Harvey Pitt: Securities and Exchange Commission chairman
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