- The Washington Times - Sunday, July 7, 2002

The business community strongly supports President Bush's plans for stricter oversight and enforcement to clean up corporate accounting abuses but warns against excessive regulations that could hurt the economy.
"There are areas of standards and oversight that have fallen down. Let's make changes to strengthen the enforcement in those areas and close loopholes, and if that requires legislation, so be it," said Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce.
But Mr. Josten said that while "the business community largely favors taking appropriate steps that are meaningful, what we're concerned about is political overreaching. We're already an economy that is struggling to recover; let's not make it worse."
Mr. Bush is expected to give final approval tomorrow to a set of administration reforms intended to beef up securities enforcement and impose tougher penalties on chief executives of publicly held companies that use fraudulent accounting methods to inflate corporate earnings.
Aides describe the president as "furious" about the rash of corporate accounting scandals, and he intends to offer a long list of remedies Tuesday on Wall Street in a major address intended to reverse the sharp decline in investor confidence in the stock market.
He is expected to call for increased funding and other resources for the Securities and Exchange Commission, and possibly the Justice Department, in a crackdown on stock and accounting fraud. Mr. Bush had called for a new independent accounting oversight body in the SEC after the Enron Corp. scandal. Legislation to create such a board, proposed by Sen. Paul S. Sarbanes, Maryland Democrat, was expected to easily pass the Senate early this month, though some business lobbyists expressed doubts about the bill last week.
"We are of course leery of any new government schemes that will needlessly add to the paperwork burden that our members and other businesses face," said Andrew Langer, a regulatory analyst at the National Federation of Independent Business, the nation's largest small-business lobby.
"The Sarbanes bill would set up a quasi-government entity. We feel it is best left to a private board with government oversight," Mr. Josten said.
But Mr. Josten predicted that "you are going to find the business community very supportive of Bush's proposals for raising standards, increasing accounting transparency and getting the bad guys."
The regulations being considered by the administration, and the Senate, are intended for public stock companies, but the small-business community fears that additional regulation could have unintended consequences that affect them as well.
"Our main concern is the overall impact that such a burden might impose. I'm looking at this with hesitation and a wait-and-see attitude," Mr. Langer said.
Dirk Van Dongen, who leads the National Association of Wholesalers and Distributors, agreed "that these things can breed overreaction. You don't want to kill the patient while trying to treat the disease. There is a distinction between unnecessary, counterproductive regulation and necessary regulation."
However, Mr. Van Dongen, who helped the White House lobby for Mr. Bush's tax cuts last year, said there was widespread support in the business community, usually hostile to any regulation, for cleaning up crooked accounting practices and regaining public trust in the investment markets.
"If you expect people to go to the casino, they have to believe that they can trust the dealer and that the place isn't rigged. Some of these practices are inexcusable," Mr. Van Dongen said. "In terms of what Bush is doing, I say, 'Right on.'"
Other business lobbyists, who spoke on the condition of anonymity, said it was important for Mr. Bush to strongly express his anger over corporate wrongdoing to outflank the Democrats who hoped to turn the business scandals into an issue in the coming elections.
"It has been said about this administration that they ultimately do the right thing, but they do it two months late. It's important for the president to show indignation about this," a lobbyist for a major business organization said.
"If the president, as head of the Republican Party, doesn't make it clear that he cares about the little guy, then the Democrats have an opportunity to paint Republicans as people who only care about those who live on top of the mountain. And shame on us if that happens," he said.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide