WASHINGTON – After whisking to passage new criminal penalties for business fraud, House lawmakers were poised to try to resolve differences with the Senate on corporate crackdown legislation to send to President Bush.
The GOP-controlled House, in a hurriedly arranged vote Tuesday, adopted stiff penalties and jail terms for executives who deceive investors or shred documents.
The 391-28 vote reflected Congress' eagerness to respond to voters' anxiety over the economy and turbulence in the stock market. In another bad day on Wall Street, the Dow Jones industrials finished their seventh straight losing session, down more than 160 points.
With midterm elections this year, the Republican leadership in the House wanted to make sure its members had something to take home.
"The health of our economy and our markets depends on trust. And when that trust is broken — when corporate crooks lie and break the law — they should go to jail," House Majority Leader Dick Armey, R-Texas, said.
Bush, who delivered two speeches within the past two weeks aimed at restoring investor confidence, has urged Congress to get him a bill to sign before adjourning for its summer recess.
"The president thinks they both passed tough bills and the bill that he's going to sign is going to be a tough bill and he's going to work with the House and Senate to bring both sides together to get it done," White House spokesman Ari Fleischer said Tuesday.
House Speaker Dennis Hastert, R-Ill., expects lawmakers to begin as early as Wednesday to try resolving differences with the Democratic-controlled Senate on overall legislation to crack down on corporate wrongdoing.
The Senate on Monday voted 97-0 to create new criminal penalties against business fraud and tighten oversight of the accounting industry. The House in April had passed an accounting oversight bill — widely considered weaker than the Senate version — but Republicans earlier had blocked the Democrats' attempt to bring up legislation to create criminal penalties.
Federal Reserve Chairman Alan Greenspan told Congress on Tuesday that the criminal penalties included in the Senate measure were "the most important part of the bill."
Greenspan also said the economy was on the road to full recovery but would continue to feel the effects of last year's recession. Corporate executives should be held accountable to accurately state the financial condition of their companies, he said.
The House penalties measure was tougher than the Senate bill, Republican leaders said. Democrats disagreed.
Rep. John LaFalce, D-N.Y., called the Republican move "a deathbed conversion."
A Republican aide, speaking on condition of anonymity, said House GOP leaders were hopeful that a final compromise with the Senate could be reached by the end of next week. Passage of a separate bill to mete out stronger penalties could give GOP lawmakers a campaign asset when they return home for the monthlong summer break beginning July 26.
But Reps. Mark Foley, R-Fla., and Mike Rogers, R-Mich., were circulating a letter among GOP colleagues Tuesday asking Hastert to have the House pass the Senate bill in order to speed legislation to Bush's desk — a move that Senate Democrats were seeking.
The House measure would create criminal penalties for company officials who retaliate against whistle-blowers, while the Senate measure provides only civil penalties for that.
Unlike the Senate bill, however, the House measure does not extend the period of time in which defrauded investors can bring lawsuits against companies.
Democrats also objected to the absence of a requirement for company auditors to retain documents.
Both the House and Senate bills would create new criminal penalties for corporate fraud and document shredding. Chief executive officers and chief financial officers who certified false company financial reports would be slapped with prison terms — 10 years to 20 years under the House bill, five years to 10 years in the Senate version. They would be fined $1 million to $5 million in the House bill, $500,000 to $1 million in the Senate bill.
In an interview, Foley said he thought Republicans should be ``proactively supporting rather than being brought reluctantly'' to approval of corporate accountability measures.
In addition to a need to restore investor confidence in the markets, Foley said, "there's a political paradigm here that we have to pay attention to." The paradigm, he said, is "control of the House and taking control of the Senate."
Democrats said the House bill fell short. They objected to it being rushed through to passage without giving them the chance to propose amendments.