WASHINGTON – Hoping to restore investor confidence in American corporations and solidify voter confidence in Republican economic stewardship, President Bush was signing corporate accountability legislation in a splashy White House ceremony.
The measure, designed to make it harder for companies to deceive investors, rivals the sweep of revisions to federal laws in the aftermath of the 1929 stock market crash.
With his signature Tuesday, Bush was to turn it into law in the grand East Room before top members of his administration whom it will give increased powers of enforcement to go after corporate fraud. Several Cabinet secretaries, the head of the FBI and the chairman of the Securities and Exchange Commission were joining members of the president's new multiagency financial crimes ``SWAT team.''
Bush also was to focus on the investors, big and small, who will benefit from the improved quality of financial reporting supporters hope the new law will provide. John Markese, who is president of the American Association of Individual Investors and a director of the Nasdaq stock market, was attending, along with representatives of small investor groups and clubs.
On the eve of the signing, investors demonstrated the view that the law is what the stock markets have needed. The Dow Jones industrial average closed up 447.49 points, a 5.4 percent gain at 8,711.88; Nasdaq was up 73.13, or 5.8 percent at 1,335.25; and the Standard & Poor's 500 index advanced 46.12 points, up 5.4 percent at 898.96.
At least two dozen members of Congress, many instrumental in forging the compromise that passed the House and Senate on overwhelming votes, also were invited to attend.
Conspicuously left off the invitation list were corporate CEOs. White House spokeswoman Claire Buchan she knew of no company chiefs expected in the audience except the New York Stock Exchange chairman, Richard Grasso.
``I'm signing a good bill,'' Bush said Monday during a Republican fund-raiser in Charleston, S.C. ``It's a bill overwhelmingly embraced by Republicans and Democrats that says loud and clear to corporate America: `We expect you to be responsible for the shareholders and your employees. And if you're not, we're going to investigate you, arrest you and prosecute you.'''
With midterm congressional elections looming, lawmakers mindful of the pre-eminence of the economy on voters' minds hurried to deal with the string of corporate accounting scandals that has shaken the stock market and devastated retirement savings.
The struggling economy, along with a Bush administration agenda critics call too pro-business, have Democrats hopeful they can make gains in November.
In part as a result, House Republicans last week accepted most of the stricter parts of a bill passed by the Democratic-controlled Senate to create the final version.
The measure tightens regulation of companies' financial reporting and provides new oversight of independent auditors.
It does so by adding criminal penalties and prison terms for corporate fraud and much document shredding; imposing restrictions on accounting firms that do consulting work for corporations whose books they audit; requiring top company executives to vouch personally for the accuracy of their companies' reports; creating new rules for financial analysts designed to prevent conflicts of interest; and establishing an independent board, with subpoena power, to oversee the accounting industry.
It does not require corporations to count as a business expense lucrative stock options they shower on top executives, a provision that many analysts believe is necessary but the administration opposes. Legislation to improve protections for employee pensions still is pending.
In his speech Monday, Bush also sought to allay worries about the economy, stressing its solid foundation for long-term growth while reassuring Americans who are hurting that he is sympathetic.
``It's a concern of mine to know that there are Americans who are still looking for a job and can't find one, and we need to do something about it,'' Bush said.
But, he added: ``I'm optimistic about our economic future.''