- The Washington Times - Monday, July 15, 2002

The war games between the White House and Democratic leaders over who is to blame for the corporate accounting scandals gives deeper meaning to the term "playing politics."
Senate Majority Leader Tom Daschle and a platoon of other Democrats have been attacking the administration almost daily for not being more aggressive in responding to the widening scandal that has shaken investor confidence and plunged stock indexes to five-year lows.
But you can make a good case that Mr. Daschle and his party have been the ones who failed to respond to this crisis in a timely manner. The Enron story broke last fall. Near the end of last week, the Senate was belatedly putting the finishing touches on a bill to clean up the mess.
Daschle & Co. have been getting away with this duplicity because the national news media have not scrutinized the Democratic leadership's credibility the same way they have the Bush administration's handling of the scandal.
For example, Mr. Daschle has been endlessly attacking President Bush for not giving the Securities and Exchange Commission sufficient resources to take prompt and aggressive action against crooked corporate executives. But Mr. Bush asked Congress in February for an additional $20 million for the SEC for this fiscal year. As of this writing, the Senate has yet to act on that request.
Last week, the president asked for a $100 million increase in the SEC budget. The Senate of course could have taken action on this score anytime it wanted, but has still not acted.
Daschle & Co. have attempted make SEC Chairman Harvey Pitt the poster boy for the scandal, charging he was too cozy with the auditing industry. "That cozy permissive relationship has to end and he in large measure has orchestrated that in the last 18 months," Mr. Daschle recently said on CBS' "Face The Nation."
Eighteen months? Orchestrated? Mr. Pitt has been on the job for less than a year. The Senate confirmed him unanimously (even Mr. Daschle did not oppose him) on July 24, 2001. And these scandals were breaking months before that vote and go back years before that.
News of Tyco International's restated earnings deficit went back several years. Global Crossing's abuses began in 1997. Enron's phony earnings numbers now appear to have occurred in 1997, 1998, 1999 and 2000. WorldCom's abuses started in 1999, at least. And we all know on whose watch these deceptions occurred, don't we?
"What we know is that the abuses we are now talking about overwhelmingly occurred in 1998 and 1999 and 2000," White House economic adviser Larry Lindsey told me. "Now, some of those practices continued, but when they began they were not caught. They are being caught now." Last week, Democrats pounded the president for failing to propose more aggressive remedies in his Wall Street speech last Tuesday.
In fact, Mr. Bush proposed a comprehensive 10-point reform plan in March to deal with these abuses that came to light after the Enron scandal unfolded. The new rules in the president's plan to plug loopholes in accounting procedures, outlaw conflicts of interests on corporate boards and with their auditors and other changes are either being implemented or are in the final stages of the rulemaking process.
New rules adopted by the New York Stock Exchange and Nasdaq for businesses that trade on those exchanges are very similar to what Mr. Bush proposed four months ago.
Government is, by its very nature, slow to act. But by the end of last week, the Senate appeared to be getting its act together, approving a wide array of antifraud provisions in an accounting oversight bill that included the 10-year prison terms Mr. Bush called for last week.
The bill contains other Bush proposals, including a provision to ban wrongdoers from ever serving on corporate boards of any publicly traded company.
The main sticking point in this bill, authored by Sen. Paul Sarbanes, Maryland Democrat, is a provision to create an independent oversight board to police the auditing industry. Mr. Bush proposed a similar oversight board four months ago (which was included in a House-passed bill), but his board would focus solely on auditing procedures and rules.
The Sarbanes version would give the board broader jurisdiction that would plunge it into the business of going after securities fraud, stepping into the SEC's authority in this area. It is this overlapping jurisdiction, which threatens bureaucratic turf wars, that concerns the White House right now.
This and other disagreements will no doubt be resolved when the bill goes to a House-Senate conference to iron out differences. There is no doubt Congress is going to pass a bill that will be signed by the president and soon.
Meantime, a lot of innocent people have been hurt by this scandal. Millions have seen their retirement stock portfolios shrunk. Thousands have lost jobs. But things will get better. Reforms are being implemented. Needed regulatory laws are being passed. And some bad guys are going to be indicted and sent to prison.

Donald Lambro, chief political correspondent for The Washington Times, is a nationally syndicated columnist.


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