- The Washington Times - Tuesday, July 9, 2002

President Bush yesterday said he plans to strengthen the Securities and Exchange Commission to oversee a crackdown on financial fraud and strongly backed the agency's embattled chairman, Harvey Pitt.
"I'll call for a stronger SEC, more investigators and more budget," Mr. Bush said in a White House press conference yesterday, the eve of his Wall Street speech on corporate responsibility. "We will vigorously pursue people who break the law. I think that will help restore confidence to the American people."
Senior Bush administration officials said the president would use today's speech to recommend increased jail time for company officers who submit intentionally misleading financial statements and to urge companies to act ethically.
U.S. markets have been shaken by a wave of accounting scandals that began last year. Massive energy, telecommunication and pharmaceutical companies have announced accounting mistatements in the billions of dollars that have sent stocks plummeting.
Democrats have blamed the scandals partially on lax oversight at the SEC, and a number have called for Mr. Pitt's resignation calls that Mr. Bush yesterday firmly rejected.
"I support Harvey Pitt," Mr. Bush said. Noting that every senator had voted in favor of Mr. Pitt's appointment last year, the president said, "I think that meant that they thought he was the right man for the job, and I still think he is."
In an op-ed piece yesterday in the New York Times, Mr. Bush's former presidential campaign rival John McCain, Arizona Republican, echoed the views of Senate Majority Leader Tom Daschle and House Minority Whip Nancy Pelosi, who used appearances on Sunday talk shows to call for Mr. Pitt's ouster.
"Congress and the president must move quickly to frame legislaton and reform corporate governance and government oversight," Mr. McCain said. "And I would add one more suggestion: They should ask for the resignation of Harvey Pitt, chairman of the Securities and Exchange Commission. While Mr. Pitt may be a fine man, he has appeared slow and tepid in addressing accounting abuses, and concerns remain that he has not distanced himself enough from former clients."
Mr. Bush said he believes that Mr. Pitt should get a chance to do the job for which the Senate confirmed him.
"I think Harvey Pitt was put in place to clean up a mess. And he's working hard to do that. It's an amazing town where the man barely got his uniform on, barely had a chance to perform, and now, for whatever reason, people think he ought to move on. The very ones who voted for him," Mr. Bush said. "Since I'm the decision-maker, I'm going to give him a chance to continue to perform."
In his press conference, Mr. Bush said some corporate executives lack an "ethical compass" and a sense of responsibility and that the resulting wrongdoing requires the intervention of the federal government.
"I'm referring to a lapse of ethics. People forgetting the fact that they represent things other than their own compensation packages, however inflated they may be; that they have a responsibility to employees and shareholders," he said.
"If you get a bunch of people together that have no sense of ethics, you're going to get this kind of behavior. And so then what the government must do and it's a legitimate role of government is to step in and hold people accountable."
The president will find much support among Americans for his view of who is to blame for recent corporate scandals, according to a new poll.
Asked whom they blamed, 72 percent of those surveyed said they blame corporate CEOs, while 8 percent said former President Bill Clinton and 6 percent said President Bush.
The poll also found that two-thirds of those surveyed blamed a "decline in morality" for recent corporate misdeeds, while only 17 percent blamed "Republicans trying to limit the role of government."
The poll of 600 registered voters, conducted July 1-3 by the Virginia-based Andres McKenna firm, also found that 47 percent say Mr. Bush has handled corporate malfeasance correctly, while 40 percent say he hasn't done enough.
Congress didn't fare as well: 61 percent say Congress hasn't done enough, compared to 24 percent who say Congress has.
Democrats see the corporate scandals as a political windfall and hope to pin the blame on Mr. Bush and Vice President Richard B. Cheney both former business executives.
"I know the Democrats are trying to divert attention from the major goal. And I hope they I hope we can work together to get good legislation out. The important thing is to restore confidence to the economy, and we can," Mr. Bush said.
Mr. Bush said today's speech will include detailed new measures to bolster trust in the markets.
"In New York, I'll outline tough new laws and actions to punish abuses, restore investor confidence and protect the pensions of American workers. We have a duty to every worker, shareholder and investor in America to punish the guilty, to close loopholes and protect employee pensions. And we will," Mr. Bush said.
Last week, telecommunications giant WorldCom Inc. announced that it had misstated $3.4 billion dollars in expenses, sending the value of its shares from more than $100 to just pennies.
During the 36-minute press conference, reporters peppered the president with questions about his 34-week delay in reporting stock sales worth more than $1 million while serving as a director of Texas-based Harken Energy Corp. more than a decade ago.
Mr. Bush said "in the corporate world, sometimes things aren't exactly black and white when it comes to accounting procedures," but added that there is a clear political undertone in the revival of a 10-year-old story.
"This is old politics," Mr. Bush said. "The SEC fully looked into the matter. They looked at all aspects of it, and they did so in a very thorough way. And the people that looked into it said there is no case.
"That was the case in the early '90s; it was the case in the '94 campaign; it was the case in the '98 campaign. The same thing happened in the 2000 campaign. I guess we're going to have to go through this again in the 2002 campaign."


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