WASHINGTON – House and Senate negotiators promised swift action as they began crafting compromise legislation Friday aimed at fighting business fraud. One lawmaker said they already agree "on about 90 percent of the issues."
The head of the Securities and Exchange Commission, which is investigating accounting irregularities at dozens of companies, said restoring investor le going off to jail."
"The public needs to see the Congress, the president, regulators and the private sector all working together to produce a result," said SEC Chairman Harvey Pitt.
Prospects for a rebound in investor trust dimmed again Friday as the market took another hit. The Dow Jones industrials dropped below their post-terror attack lows in a dramatic 390-point sell-off. The average finished at 8,019.26, the Dow's lowest close in almost four years.
Responding to reporters' questions, Treasury Department spokeswoman Michele Davis would not comment on the market plunge. She did say the principals of a presidential working group on financial markets, including Pitt, Treasury Secretary Paul O'Neill and Federal Reserve Chairman Alan Greenspan, have not convened in the last two weeks as Wall Street spiraled downward.
With congressional elections looming in November, lawmakers are trying to restore confidence in business and in stock markets battered by a wave of corporate accounting scandals. President Bush has urged Congress to send him a final measure before lawmakers adjourn for their August break.
Twenty lawmakers on a House-Senate conference committee convened for the first time Friday, stressing before reporters and television cameras the areas of agreement and the need for decisive action.
The gritty business of reconciling differences between bills passed by the GOP-led House and Democratic-controlled Senate, which create new criminal penalties for business fraud and tighten oversight of the accounting industry, was coming later in meetings behind closed doors.
Panel members began with "unanimous agreement on about 90 percent of the issues," said Sen. Phil Gramm, R-Texas.
The lawmakers' aides planned to meet through the weekend.
"We confront a very serious challenge here," said Sen. Paul Sarbanes, D-Md., chairman of the Senate Banking Committee and a leader of the conference panel. "I believe that we can move expeditiously. ... We can't do less than that."
Pitt, answering questions after a speech at the National Press Club, addressed calls by Democratic leaders and other lawmakers for his resignation.
"Investors need the very best protection they can get. I really believe that they need somebody who knows where the bodies are buried ... and is not afraid to take decisive action," he said.
The SEC is investigating accounting irregularities at Enron Corp., WorldCom Inc. and dozens of other big companies.
Senate Majority Leader Tom Daschle, D-S.D., Sen. John McCain, R-Ariz., and others have called for Pitt to resign in part because of his past work as a securities lawyer representing the accounting industry and big corporations before the SEC.
SEC rules required Pitt to remove himself from cases involving former law clients for one year. Pitt said that when that period expires in two weeks, he will no longer automatically disqualify himself, instead deciding whether to do so on a case-by-case basis.
Lawmakers are using far-reaching legislation unanimously approved by the Senate as the underlying text for crafting the new compromise measure — a sign that Republicans may be willing to adopt a tougher bill than they previously supported.
The package adopted by the Senate on Monday would create new criminal penalties and jail terms for business fraud and tighten oversight of the accounting industry. The GOP-led House followed up Tuesday with a 391-28 vote on a criminal penalties bill that is more stringent in some aspects than the Senate measure but considered weaker in others.
The House in April had passed an accounting oversight bill that is widely viewed as weaker than the Senate version.
In negotiations, Republicans will focus on powers of a new independent body to oversee the accounting industry. Lawmakers of both parties agree broadly on new criminal penalties for corporate fraud and executives who shred documents.