A congressional committee on Thursday authorized subpoenas to compel testimony by three WorldCom (WCOM) officials and an influential Wall Street analyst who touted the company's stock, while President Bush said he was worried about the economic fallout of the recent wave of accounting scandals.

The House Financial Services Committee was set to summon WorldCom Chief Executive John Sidgmore and former boss Bernie Ebbers for a July 8 hearing. The company faces bankruptcy after being charged with fraud for improperly booking ordinary expenses, a move that allowed it to post $1.38 billion in net income in 2001, instead of a loss.

The panel also planned to subpoena WorldCom's recently fired financial director Scott Sullivan, and Salomon Smith Barney telecommunications analyst Jack Grubman, who long trumpeted WorldCom to investors before cutting his rating a day before the Clinton, Miss.-based company disclosed the scandal.

WorldCom hired investment bank Blackstone Group to help it in a potential restructuring, a source familiar with the situation said on Thursday.

"I'm concerned about the economic impact of the fact that there are some corporate leaders who have not upheld their responsibility," Bush told reporters ahead of a meeting with Russian President Vladimir Putin during a summit in Canada of the Group of Eight nations.

President Bush demanded a full investigation into a scandal that rivals the collapse of bankrupt energy trader Enron Corp. and casts further doubt on auditor Andersen, which was convicted for obstructing an Enron probe and vetted WorldCom's books until being fired this year.

U.S. officials echoed the president's outrage about WorldCom and said corporate leaders should be prosecuted to the full extent of the law. U.S. Treasury Secretary Paul O'Neill said in some ways regulations needed to be strengthened.

The shockwaves that rocked global markets over WorldCom's improper accounting of $3.85 billion in ordinary expenses eased on Thursday but officials intensified their calls for reform.

O'Neill said the people responsible for the WorldCom mess should be prosecuted to the full extent of the law. He said the U.S. Securities and Exchange Commission, which on Wednesday filed charges against WorldCom for manipulating earnings, should be given the right to freeze the accounts and assets of officials implicated in scandals such as WorldCom.

White House economic adviser Lawrence Lindsey said the administration is backing a $250 million increase in funding for the SEC, the U.S. agency charged with protecting investors and maintaining the integrity of the securities markets.

Civil Suit

On Wednesday, the SEC filed a civil lawsuit against WorldCom, alleging it hid expenses to artificially inflate earnings to meet Wall Street expectations. The accounting gimmickry covered up $1.22 billion in losses Worldcom would have otherwise posted for 2001 and this year's first quarter, the SEC said.

The SEC said WorldCom's disclosures confirm the existence of "accounting improprieties of unprecedented magnitude."

The U.S. Justice Department, which has the power to bring criminal charges, said WorldCom was under review.

Grubman, a longtime WorldCom cheerleader, on Monday finally cut his rating on the company's shares to "underperform" from "neutral." By that point, the stock had fallen to around $1, from a peak of $64 in 1999.

During the bull market, Grubman became one of the highest-paid analysts on Wall Street and had the ear of telecom industry executives during the merger boom of the late 1990s.

On Wednesday, Grubman was harassed by television cameras and said he was no expert on bankruptcy as his former pet company was close to defaulting on its mountain of debt.

Officials from WorldCom and Salomon Smith Barney officials did not immediately return calls seeking comment.

Bankruptcy Probable

Analysts said WorldCom could declare bankruptcy within the week as lenders call in millions in loans. WorldCom said it will start laying off 17,000 people — about 20 percent of its global work force — on Friday in hopes of saving $900 million per year.

"If loans are called, in order to avoid an immediate shutdown, leaving lots of customers in the lurch, they'd have to file for bankruptcy," said Alec Ostrow, a partner in the bankruptcy law firm of Salomon, Green & Ostrow in New York.

In a statement Tuesday, WorldCom said its board of directors had found $3.8 billion was wrongly listed on its books as capital expenses in 2001 and 2002. That means WorldCom may have actually lost millions of dollars when it reported profits.

The company has fired Sullivan, its chief financial officer, and also said it has accepted the resignation of David Myers as senior vice president and controller.

Arthur Andersen, which was WorldCom's accountant during the five quarters in question, said its work was in compliance with SEC standards. It suggested Sullivan was to blame and said important information was withheld from auditors.

Andersen was convicted in early June of obstructing justice in a case involving former oil giant Enron Corp.

WorldCom's fall comes amid a rash of corporate scandals, from Enron to Tyco International (TYC), Global Crossing and Adelphia Communications (ADLAE), which filed for bankruptcy Tuesday.

WorldCom, second only to AT&T in the long-distance market, started as a small long-distance company but grew through acquisitions over the past 15 years. Two years ago, that growth stopped when regulators blocked WorldCom's proposed $129 billion merger with Sprint Corp.

In April, chief executive Bernard Ebbers resigned amid mounting debt at WorldCom and questions about $408 million in loans the company gave him.

Rick Black, analyst for Blaylock & Partners in New York, said the latest disclosures raise further suspicions about Ebbers.

"The people who were running the company prior to this should know what's going on," he said. "If the CFO knows, the next question people are going to ask is what did Bernie Ebbers know, and of course they're going to ask what did the board know."

Ebbers could not be reached at home and did not immediately return calls to his office.

In an interview after his ouster, Ebbers told a TV station: "Our accounting, to the best of my knowledge, is absolutely clean."

The Associated Press and Reuters contributed to this report.