The debate over accounting fraud shaking corporate America has become a major topic of discussion at a meeting of U.S. governors in Idaho.

Many of the 30 chief executives at the National Governors Association meeting say fallout from the scandals is affecting the economies of their states, already struggling with budget shortfalls.

During an open session of the talks Sunday, Alaska Governor Tony Knowles said there is a "crisis in confidence" in the "ethical leadership of corporate America." His colleague from Virginia, Mark Warner, said the economic recovery appears to have stalled in the wake of continuing revelations of mismanagement at major U.S. corporations.

The governors are split over how the issue may affect mid-year elections in November, with many Democrats saying it will help their party politically and Republicans rallying behind President Bush.

Republicans now hold 27 govenorships to 21 for Democrats. The chief executives of two states, Minnesota and Maine, belong to neither party.

Mr. Bush is expected to talk about corporate governance and the economy, when he travels to Alabama Monday to campaign for the Republican candidate for governor. The president has been criticized by some Democrats for his own past business practices, including the selling of his stock in an energy company before it posted large losses 12 years ago. The Securities and Exchange Commission (SEC) investigated the sale and found no wrongdoing.

Congressional Democrats also are demanding the current SEC chairman, Harvey Pitt, resign, saying he does not have the credibility to lead Wall Street reform efforts. Mr. Pitt refuses to quit, citing President Bush's support.