- The Washington Times - Sunday, July 14, 2002

President Bush said yesterday that restoring public confidence in America's business leaders is "perhaps the greatest need for our economy" and urged Congress to move swiftly on his package of corporate reforms.
In his weekly radio address, the president reiterated the proposals he made to deal with the growing wave of corporate crime and sounded a bipartisan note, even as the Democratic response to his remarks also urged Mr. Bush to move more quickly to counter public concerns that have contributed to a meltdown in the stock market.
"Perhaps the greatest need for our economy at this moment is restoring confidence in the integrity of the American business leaders," Mr. Bush said. "Nearly every week brings news of greater productivity or strong consumer spending, but also a discovery of fraud and scandal, problems long in the making and now coming to light.
"This week, I announced new steps my administration is taking to crack down on corporate fraud," he said. "My administration is working with congressional leaders in both parties to pass legislation that will protect workers and shareholders and investors.
"I am pleased that the Senate approved several of my new proposals this week. The Senate, the House and my administration will not stop working until a final bill is passed," Mr. Bush said. He urged Congress to act before its August break.
In the official Democratic repsonse to Mr. Bush's radio remarks, Rep. David Phelps of Illinois said investors and workers look to Mr. Bush for "immediate action to clean up this wrongdoing and pass tougher rules that will hopefully prevent future scandals."
Mr. Phelps said the opportunity for bipartisan reform "is being fought by special interests, " adding, "Enough is enough."
He listed proposals before Congress that seek to "crack down on these corporate wrongdoings, protect workers and shareholders, and restore consumer confidence in the stock market."
Mr. Bush yesterday again called for a strong accounting industry oversight board, something he only touched on in a major address on corporate reform that he delivered on Wall Street Tuesday. He first recommended such a board in March.
"As part of this crackdown, I support the creation of a strong, independent board that will provide effective oversight of the accounting profession," Mr. Bush said in the pre-recorded radio address. "This board would have the ability to monitor, investigate and enforce high ethical principles by punishing individual offenders," he said.
The Securities and Exchange Commission has moved to establish a nine-member independent private sector board to govern auditors. The Republican-run House also has passed legislation creating a five-member board.
But Democrats criticize the president for not giving the issue a higher profile and are moving toward passage in the Senate of a bill creating a five-member board with greater powers than the House version. The Democrats' measure in the Senate sets standards for the board while the House legislation allows the board to set its own standards.
The White House opposes provisions in the Senate version which let the oversight board enforce U.S. securities laws. The Bush administration says only the SEC should have an enforcement responsibility.
A Newsweek poll released yesterday reported that only about one in three Americans believes Mr. Bush's proposals for curbing corporate misbehavior are tough enough.
The July 11-12 poll of 1,000 adults found only 34 percent view the president's corporate reform proposals as "about right," while 47 percent said they were not tough enough. Three percent said they were too tough while 16 percent had no opinion.
A majority of 51 percent approved of Mr. Bush's response overall to recent business scandals at Enron Corp., WorldCom and other companies, while 32 percent said they disapproved of his response.
As the administration seeks to get a handle on the recent business scandals, The Washington Post reported yesterday that the head of the president's new task force on corporate crime served on the board of Providian Financial Corp. during a period when it was being investigated by state, local and federal agencies for price-gouging customers who filed class-action lawsuits against the company. Providian paid more than $400 million in 2000 to settle the investigations and lawsuits.
Deputy Attorney General Larry Thompson served on the Providian board from June 1997 until he was confirmed by the Senate in May 2001. Mr. Thompson was not questioned about his role at Providian during his Senate confirmation hearings.
Mr. Thompson held 89,651 shares of Providian on March 21. Those shares were valued at more than $4.7 million on the day he took office as deputy attorney general.
An ongoing class-action lawsuit brought by Providian employees charges that company officers and directors, including Mr. Thompson, encouraged large holdings of Providian stock in employee 401(k) retirement plans while the same officials were employing questionable accounting methods and cashing in their own shares.
Justice Department spokesman Mark Corallo said Mr. Thompson was proud of his service on Providian's board.
"He only became aware of the [fraud] issues when regulators began to make inquiries," Mr. Corallo said. "He then personally took the lead in making the company doing the right thing."
The spokesman said Mr. Thompson never sold a single share of the company's stock in the time he served on its board.
"He felt that it was proper and necessary to own shares of the company's stock," Mr. Corallo said. "He did not want to serve on a board and make decisions about other people's money without having a stake in the company himself."
The recent business scandals have threatened to become a political liability for Mr. Bush as Democrats try to use the issue against him and his fellow Republicans ahead of November's congressional elections.
Mr. Bush himself has been criticized for taking a low-interest loan more than a decade ago from an oil company where he served as a director.
Although widespread public outrage over corporate fraud may dominate this year's midterm elections, both sides are treading carefully in how they deal with the issue.
Some Democrats fear they could regain a reputation of being hostile to business if they carry their attacks too far. The White House must weigh the need for better business ethics against the risk of further panicking jittery markets, but it also wants to ensure that the public understands that many of the corporate scandals had their beginnings in the Clinton years.
"You can't be pro-jobs and anti-business," Sen. Joseph I. Lieberman, Connecticut Democrat, said. Mr. Lieberman warned of "the twin dangers of doing too little and doing too much."
Mr. Lieberman and other Democrats fear that too much corporate bashing could harm the party's recent efforts to cultivate the business community.
Al From, founder of the Democratic Leadership Council, said Republican attempts to raise the old stereotype of Democrats as anti-business are expected. "And it's important for us not to let that happen."
"It's not being antibusiness to go after bad actors," Mr. From said. He said Democrats should focus their criticisms on the abuses and the abusers not on corporate America itself.
Bush spokesman Ari Fleischer dismisses most criticism from Democrats as election-year partisanship.
"The ability to fight corporate corruption will be tested by whether people in Washington want to work together to get something done or they'd rather point fingers and place blame," Mr. Fleischer said.
House Speaker J. Dennis Hastert, Illinois Republican, suggested action, not words, are important so that "people who make their investments, save money, own 401(k)s, can have their confidence in the markets again."
This article is based in part on wire service reports.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide