President Talks Tough, Carries a Small Stick
Enron’s collapse, WorldCom’s accounting disclosure and other instances of corporate wrongdoing are spurring debate over new laws and government rules, reports The Wall Street Journal. President Bush is calling for harsher penalties for white-collar criminals.
On Tuesday to several hundred business leaders at the Regent Wall Street Hotel, the President proposed doubling prison time for mail and wire fraud to 10 years as well as extending prison time for document shredding of the sort committed by Enron’s auditor, Arthur Andersen LLP. He asked the SEC to freeze more payments to executives at companies under investigation, and corporate boards to curb loans to executives of the type received by WorldCom. “My administration will do everything in our power to end the days of cooking the books and shading the truth and breaking our laws,” he says.
Proposals include overseeing accountants with a new oversight board assured, either by law or SEC action, and punishing wayward CEOs with stricter criminal penalties for fraud convictions. Congress is likely to approve $776 million SEC budget for coming fiscal year, a 77 percent increase. The SEC is pursuing new rules to improve accuracy of annual reports and speed filing. Bush proposes that the House would force employees to allow workers to diversify 401k holdings within three years. The Senate is pondering tougher measures. Prospects for passage this year are uncertain.
Moderator Comment: What is your reaction to President Bush’s speech on corporate corruption?
President Bush set the right tone with his speech. We’re afraid, however, that all of this is going to amount to more bark than bite when regulations are finally passed.
The accounting manipulations, document shredding and corporate fraud activities that have been dominating the news amount, in our minds, to grand larceny. How many years of jail time comes with being found guilty of robbing a bank? Costing shareholders and employees millions through willful mismanagement and unethical activities is no less egregious. The only difference is the manner of entry into the victim’s wallet. The time should fit the crime. [George Anderson – Moderator]
- Bush Crackdown on Business Fraud Is Sure Signal That New Era Is Here – The Wall Street Journal (subscription required)