Lawmaker Suggests White House Heed Its Own Advice
WASHINGTON – The drab mailroom at the Securities and Exchange Commission became a wellspring of investor confidence Wednesday as CEOs for the first time in U.S. history pledged their corporate books were clean.
At the same time, President Bush, pumping the economy at a public event in Wisconsin, said novice investors, rattled by corporate accounting gimmicks, should take heart.
"We're going to make sure the numbers are real. We've got a lot of first-time stockholders who don't appreciate being told one thing is happening but reality was another," Bush told an audience at the University of Wisconsin-Milwaukee.
Investors can search the SEC's Web site to see which CEO certified that their corporation's numbers are true.
Some analysts expect a burst of confidence, but fret that a new wave of clean-up-the-books regulations will punish companies who've been clean all along.
"This law is so long and so complex it's rushed -- really an overnight rush job," said Jonathan Newton, a securities law partner at Baker and McKenzie. "We're going to see in the next six months whether they put a bigger burden on companies than anything else."
But lawyers for investors burned in corporate accounting meltdowns said their advice remains: Investors beware, the certification is no guarantee.
"Here all that's required is that they certify to the best of their knowledge that it's true. Those are weasel words that give lawyers room to maneuver," said Bill Lerach, a shareholder advocate.
Now that many CEO's names are on the dotted line, some in Washington want White House number crunchers to do the same.
Democrat Sen. Ernest "Fritz" Hollings of South Carolina wants White House Budget Director Mitch Daniels to send the SEC "a sworn statement attesting to the accuracy and completeness of the government's most recent financial reports."
Hollings said the government understates the cost of future liabilities and specifically griped that the Bush White House is hiding the size of the deficit. Hollings said it could be three times the White House figure of $165 billion.
Daniels didn't send a letter to the SEC, but he told Fox News he agrees with the thrust of Hollings' criticism.
"If the senator doubts the accuracy of the books of the federal government, he's exactly right," Daniels said. "When you count the unfunded liabilities of Social Security and Medicare, and some of our other pension funds that are even larger than the ones the government has been carrying on its books, well, he's right about that too."
The White House denies that it is lying about the deficit, but in an era where rock solid numbers are in vogue, Democrats and the White House are expected to spar until Election Day on the true size of the deficit and who's to blame for its unwelcome return.
Fox News' Major Garrett contributed to this report.