WASHINGTON – One day after a Wall Street speech that detailed President Bush's plans for increasing corporate responsibility, the president seems to be warming to a counter-proposal offered by a Democratic senator.
Sen. Paul Sarbanes of Maryland, chairman of the Senate Banking Committee, has proposed legislation that is widely seen as offering the toughest set of rules for cracking down on corporate crimes, much more so than a bill passed in the Republican-led House in April.
Bush, who met with congressional leaders over breakfast Wednesday, is said to be seriously mulling the Sarbanes bill.
"The president said that he felt that there were a lot of good features in Sarbanes, that he doesn't have, you know, big problems with it. There are some areas where there is some concern; there are some other areas which he'd like to strengthen. But basically he talked positively about the Sarbanes bill," said Senate Minority Leader Trent Lott, R-Miss.
Bush spelled out his own ideas for cracking down on corporate crime in a speech to some 1,000 members of the Association for a Better New York at Wall Street's Regent Hotel Tuesday.
"There is no capitalism without conscience. There is no wealth without character," Bush said, introducing a 10-point plan for a more straightforward auditing system and greater accountability of corporate leaders.
In the long-anticipated speech, Bush said it is time to reaffirm basic principles, return to truthful books, honest people and well-enforced rules against corruption.
"Self-regulation is important, but it is not enough," Bush told executives. "We must make sure that those who breach the trust of the American people are punished."
Bush said he signed an executive order creating a Corporate Fraud Task Force to pursue and prosecute large-scale corporate fraud, acting as a "financial crimes swat team, overseeing the investigation of corporate abusers and bringing them to account."
He will also seek longer jail terms for executives who commit such wrongdoing and more aggressive enforcement of existing corporate fraud laws, including doubling prison term penalties to 10 years for mail and wire fraud.
"Fraud is a punishable offense and the punishment must be as serious as the crime," he said.
He also asked Congress to strengthen the hand of Securities and Exchange Commission investigators to let them freeze improper payments to corporate executives and strengthen laws that prevent the destruction of corporate documents in order to hide crimes.
The president is trying to come up with a plan that will help quell the shakiness that investors and workers have felt since the collapse of energy giant Enron last December.
After the collapse, several other publicly-traded companies, including telecom giants Global Crossing and WorldCom and engineering and defense conglomerate Tyco International, announced their own massive losses, which had been disguised in accounting reports over the last several years. On top of all that, many of the chief executives of the companies took part in profit-taking when they knew their companies were failing.
"We learned that CEOs (are) earning tens of millions of dollars in bonuses just before their companies go bankrupt, leaving employees and retirees and investors to suffer," Bush said. "The business pages of American newspapers should not read like a scandal sheet."
Earlier this year, the White House proposed a "zero-growth" budget for the SEC that calls for staff reductions in securities fraud investigations. However, the president called on Congress Tuesday to immediately pass a $20 million increase in SEC funding to hire 100 new enforcement officers, and an additional $100 million next fiscal year for more officers and the technology to support them.
"I asked Congress four months ago for funding to place 100 new enforcement personnel in the SEC. And I call on Congress to act quickly on this request," he said.
Bush was joined by New York Democratic Sens. Chuck Schumer and Hillary Clinton, New York Reps. Vito Fosella and Charles Rangel and Mayor Michael Bloomberg. He said that despite the terror attacks, the American economy rebounded, thanks in part to the independent entrepreneur.
"The American economy is the most creative and enterprising and productive system ever devised ... We can be confident because of the amazing achievements of American workers and entrepreneurs."
Prior to the president's speech, Democratic leaders took the offensive, saying that Bush must do more than just push platitudes.
"To us, it's not enough to talk about accountability, you have to act to ensure it," Senate Majority Leader Tom Daschle, D-S.D., said.
For his part, Bush blamed the Clinton 1990s for the current crisis.
"The 1990s was a decade of tremendous economic growth. It was also a decade when the promise of rapid profits allowed the seeds of scandal to spring up. A lot of money was made, but too often standards were tossed aside," Bush said.
Bush said the country could reclaim the promise of our economy by getting an ethical compass from CEOs themselves.
"I challenge every CEO in America to describe in their company's annual report prominently and in plain English details of his or her compensation package, including salary and bonus and benefits. And the CEO, in that report, should also explain why his or her compensation package is in the best interest of the company he serves," Bush said.