- The Washington Times - Wednesday, July 10, 2002

NEW YORK President Bush yesterday created a "financial crimes SWAT team" to crack down on corporate fraud and portrayed the Clinton-era prosperity of the 1990s as built in part on false profits and lax standards now coming to fruition as scandals.

"The 1990s was a decade of tremendous economic growth," the president said in a speech to Wall Street captains of industry. "As we're now learning, it was also a decade when the promise of rapid profits allowed the seeds of scandal to spring up.

"A lot of money was made, but too often standards were tossed aside," he added.

Mr. Bush did not mention former President Bill Clinton specifically, but the Republican National Committee yesterday called the 1990s the "era of irresponsibility" and said, "Scandal after scandal, revelation after revelation, Clinton-Gore always had an excuse."

The president did take pains to emphasize that the rash of corporate scandals that erupted in recent months had its genesis before he took office in 2001.

"The lure of heady profits of the late 1990s spawned abuses and excesses," Mr. Bush told 600 people in the cavernous ballroom of the Regent Wall Street Hotel. "The misdeeds now being uncovered in some quarters of corporate America are threatening the financial well-being of many workers and many investors."

He lamented that "nearly every week" brings new "discovery of fraud and scandal problems long in the making, but now coming to light."

It was the strongest indication to date that Republicans were trying to portray the Clinton era of prosperity as built in part on a dot-com bubble and slipshod accounting practices. It mirrored Democratic efforts to portray the Reagan-era prosperity of the 1980s as the "decade of greed."

Mr. Bush, whose past business practices had come under fire in recent days, sought to cast himself as a reformer yesterday.

"I'm calling for a new ethic of personal responsibility in the business community, an ethic that will increase investor confidence, will make employees proud of their companies and again regain the trust of the American people," he said.

To that end, the president signed an executive order creating the Corporate Fraud Task Force, headed by Deputy Attorney General Larry Thompson and aimed at rooting out white-collar crimes.

"I'm also proposing tough new criminal penalties for corporate fraud," he said. "This legislation would double the maximum prison terms for those convicted of financial fraud from five to 10 years."

In addition, Mr. Bush called on Congress to spend $100 million in the next year to beef up investigative manpower and technology at the Securities and Exchange Commission.

"If more scandals are hiding in corporate America, we must find and expose them now, so we can begin rebuilding the confidence of our people and the momentum of our markets," Mr. Bush said.

"I've also proposed a 10-point accountability plan for American businesses, designed to provide better information to shareholders, set clear responsibility for corporate officers, and develop a stronger, more independent auditing system. This plan is ensuring that the SEC takes aggressive and affirmative action."

Attorney General John Ashcroft said that the president's initiative would bring a "new measure of accountability to American businesses" and that tougher penalties, including longer jail sentences, would help deter corporate crimes.

Many business analysts applauded Mr. Bush's moves, but his proposals did not immediately restore confidence on Wall Street yesterday as the Dow Jones Industrial Average fell by almost 180 points.

Although Mr. Bush says he supports SEC Chairman Harvey Pitt, Sen. John McCain yesterday reiterated his call for Mr. Pitt's resignation.

"The American people need confidence now," the Arizona Republican said. "I don't believe they can have confidence in Mr. Pitt."

Mr. McCain did not watch Mr. Bush's speech, which drew polite but restrained applause, but said the president "used the bully pulpit well."

"Now we need to move forward, and it's up to Congress to enact the specifics," Mr. McCain said. "He made a very strong statement. He used the bully pulpit of the presidency very effectively.

"He wants bad people to go to jail, he wants increased penalties, he wants a whole lot of things that a lot of members of Congress want and the American people want," Mr. McCain said. "The president was trying to get the message out that we've got to get tough and cure this problem."

Some leading Democrats criticized the president's speech. Sen. Christopher J. Dodd, Connecticut Democrat, said Mr. Bush demonstrated "a lack of leadership" with his "long overdue" speech.

"Unfortunately, what he had to say was sort of long on rhetoric and very short on details," he said. "Here we are debating on the floor of the United States Senate at this very hour the most comprehensive reforms of the accounting industry that this Senate has considered in years, and the president had almost nothing to say about it. That's terribly disappointing to many of us."

Sen. Jon Corzine, New Jersey Democrat, agreed.

"We heard he was going to have a Teddy Roosevelt moment, but when you really cut to the substance, he had a teddy bear moment," he said.

"I thought we had a rehash of what is obvious and basically what is already in the system. Except for the anti-fraud task force which he spoke about, I don't think there was anything new within the speech."

Sen. Patrick J. Leahy, Vermont Democrat and chairman of the Senate Judiciary Committee, said Mr. Bush was playing catch-up with the Democrats.

"I welcome the president to the urgent need to restore trust in our markets," he said. "I welcome his ideas. Some of them seem very, very familiar. We had invited the president to join in this effort, and for months the White House had declined that invitation. But now that the president's accepted it, I think that we may actually accomplish something."

He added: "The president's plan is a start but doesn't protect whistleblowers."

Rep. Mark Foley, Florida Republican, said Democrats, alarmed at Mr. Bush's high approval ratings, were trying to use the accounting scandals as a political weapon against him.

"Democrats are griping about cooked books so their goose isn't cooked come November," he said. "Unlike the president, all the Democrats know how to do is blame and point fingers."

He added that Democrats are "trying to scare Middle America by attempting to link our party and our president with corporate corruption."

"The Democrat Party tells Americans they're united with the president," Mr. Foley said. "But that same hand that pats him on the back just loves to stab him in the back."

Dave Boyer, Audrey Hudson and Jerry Seper contributed to this report.


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