Bush calls for 'single standard' with 401(k)s
WASHINGTON (CNN) -- Amid questions raised by the collapse of Enron, President Bush outlined a proposed changes Saturday that are meant to ensure executives and employees have equal access to their 401(k) stock portfolios.
Without specifically addressing Enron, Bush said in his weekly radio address, "We need to make sure that companies have a single standard for their executives and their employees."
The president has spoken about the subject twice this week already -- first in Tuesday's State of the Union address and Friday at a meeting of Republican lawmakers -- and most of the proposals mentioned Saturday were not new.
Nevertheless, Bush said he wanted to drive home the point that an overhaul of pension law is key to defeating the recession, which he has already said is a goal to which the United States must be committed.
Bush proposed that workers be allowed to sell company-distributed shares in their retirement account and diversify after participating in their 401(k) plan for three years. He also called for companies to have a single standard among executives and employees to prevent executives from selling company stock during a time when employees are barred from doing so.
Enron and its accounting firm, Andersen LLP, are under a congressional investigation amid charges that Enron misled investors and employees about its precarious financial health and engaged in questionable accounting practices. Thousands of employees saw their retirement savings evaporate because they invested heavily in Enron stock, whose value has plummeted.
The Houston-based energy corporation filed for bankruptcy in December, but critics say Enron executives knew for months of the company's troubled finances and misled both employees and Wall Street -- even as they dumped Enron stock.
The president has stepped up his criticism of Enron executives over the past few weeks, expressing outrage that Enron employees and shareholders may not have been given the facts about the company's precarious financial position.
But analysts have pointed out that the Bush proposals, had they been in effect, would have had little impact on the Enron situation. Enron employees were, in fact, free to sell all but 11 percent of their Enron stock at any time before age 55. The remaining 11 percent was Enron's employer "match" to employee contributions.
In the latter stages of the collapse, employees were barred from selling Enron stock for a brief period -- but by that time the price had already fallen from a high of around $90 to just over $13. And, a CNN-sponsored investigation revealed evidence that only one Enron executive disposed of a significant amount of stock during the lockdown.
In his radio address Saturday, Bush said workers should also be informed at least 30 days in advance of a "blackout period," which occurs when companies switch the management of their 401(k) plans from one investment firm to another. Employees do not have access to their plans during these periods.
"Company executives with power over 401(k)s will be held accountable for treating their workers' assets as carefully as they treat their own," Bush said.
He also said workers should receive "solid, independent investment advice," regular information about the current value of their accounts, and the right to sell and diversify their stock portfolios.
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