- The Washington Times - Wednesday, July 10, 2002

The top House Democrat yesterday blamed the Republican revolution and deregulation for the latest series of corporate financial scandals as both parties tried to deflect election-year fallout.

"This is a Republican majority in the House that is of, by and for corporate America," said Minority Leader Richard A. Gephardt of Missouri. "When capitalism doesn't have enforced rules, capitalism can injure itself, and people will not gain from those activities."

House Majority Leader Dick Armey, Texas Republican, said Mr. Gephardt, who is considering a run for the presidency in two years, is only interested in scoring political points.

"I have long watched Minority Leader Gephardt have a firm and immediate grasp on politics almost exclusively," Mr. Armey said. "This is another case in point. And quite frankly, it is sad."

Senate Minority Leader Trent Lott, Mississippi Republican, said Democrats are still searching for an issue with which to damage President Bush in this year's midterm elections.

"It is an election year, and they are looking for something, anything, that they can try to get some traction on," Mr. Lott said. "But it's pretty hard for Dick Gephardt to argue he was not at the scene of the crime. He has been here. I mean, it was his president that was in the White House. A lot of these SEC rules that we're now trying to change were there."

Democrats called yesterday for increased regulation to crack down on corporate misconduct while Mr. Bush proposed beefing up the existing system of safeguards to protect investors.

Legislation backed by Senate Democrats would create a new, independent accounting-oversight board, a proposal not favored by Mr. Bush or the Republican-led House. Many Democrats said the president's proposals, which include boosting the budget of the Securities and Exchange Commission, do not go far enough.

Republicans said Democrats were using the corporate wrongdoing as an opportunity to push their standard agenda of more regulation.

"There is a danger here that we will go overboard and cause more problems than solutions," Mr. Lott said. "Hopefully we can find the areas where we really do need to act and areas that would wind up being a problem."

Sen. John McCain, Arizona Republican, is one of the few Republicans in Congress who has called for the resignation of SEC Chairman Harvey Pitt. Mr. McCain said he favors deregulation but believes the system needs to be fixed.

"Teddy Roosevelt proved that you need to have a certain amount of corporate governance," Mr. McCain said. "The system is broken down. It broke down in the S&L crisis. But I would not blame the free enterprise system. Our economy is the best one in the world. I certainly wouldn't want to adopt anybody else's economic model."

Rep. Martin Frost of Texas, chairman of the House Democratic Caucus, said Mr. Bush should have delivered his address on corporate responsibility to House Republicans.

"House Republicans earlier this year overwhelmingly rejected Democrats' attempts to impose criminal penalties on corporate criminals," Mr. Frost said. "If President Bush wants Americans to trust him on corporate accountability, he has to convince House Republicans to stop coddling corporate criminals."

But Mr. Armey said the Democrat-led Senate is to blame for failing to address earlier this year a House-passed bill that would increase corporate accountability.

"Congress has sent no signal to Wall Street because the Senate has not done so," Mr. Armey said. "Had the House bill been taken up Wall Street and every one of these guys would have gotten the message. You can't say the House legislation is inadequate to this purpose because the Senate hasn't moved it on."

• Stephen Dinan contributed to this report.

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