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Congress Sends Corporate Reform Bill to Bush - 2002-07-26

The Senate and House of Representatives have both approved legislation aimed at cracking down on corporate and accounting fraud and sent it on to President Bush for signature.

The House vote was 423-3, the Senate 99-0 to approve the legislation, the result of tough negotiations, amid market declines and falling investor confidence.

"The bottom line here is, the American people have won," said Republican Congressman Michael Oxley, chairman of the House Financial Services Committee. "We have restored, or we are beginning to restore investor confidence with what we have done, as well as what has been happening in the private sector and among the regulators."

Republicans and Democrats praised each other for the bipartisan agreement. But they also claimed credit for their respective sides. "We were able to end industry self-regulation. This is something that we Democrats believed from the beginning, that self-regulation of industries hadn't worked and wouldn't work," said Democratic Congressman John LaFalce.

Reflecting the urgency lawmakers attached to the legislation, the Senate moved up its vote from Friday to Thursday. Democratic Senator Paul Sarbanes said Congress acted to restore confidence in America's markets, and said the legislation would "withstand the test of time."

He said, "It's our purpose with this legislation and other actions which will have to be taken by the regulatory agencies and private sector, to once again see that our capital markets deserve the enviable reputation for fairness, efficiency, and transparency that they have enjoyed through the years."

The bill, which now goes to President Bush for his signature, provides for tough criminal penalties for corporate fraud. On accounting reform, it establishes an independent board to oversee that industry.

With the continuing public outcry over the collapse of large companies such as Worldcom and Enron, and the loss of billions in investment dollars, the legislation gives defrauded investors more time in which to file lawsuits.

There were political firefights along the way. Key Republicans and Democrats accused each other of delaying final action on the bill.

Republicans were also angered by House democratic leader Richard Gephardt's statement that Democrats might win back the majority in the House in elections this November, as a result of public frustrations over the economy.

"The corporate scandal was started from greed, and a lack of moral leadership," said key House Republican Tom Delay. "This new Democrat strategy is filled with political greed, and is morally bankrupt."

Democrats frequently allege that Republican policies created the atmosphere in which the wave of corporate misconduct was able to occur. Republicans accused Democrats of using economic downturns for political gain.

President Bush Thursday praised the legislation, particularly the accounting oversight provisions, and said leaders in Congress heeded the call to put the interests of investors and employees first.

Treasury secretary, Paul O'Neill, said congressional approval would establish a clear requirement for corporate accountability.