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In the Crossfire

Resisting the political blame game

(CNN) -- President Bush signed into law Tuesday the Accounting Industry Reform Act, legislation intended to rein in corporate wrongdoers and toughen oversight of the beleaguered accounting industry. But which party has done more to curb corporate corruption?

Did the Democrats lay the foundation of scandals such as those at Enron and WorldCom during the Clinton years? Or did Bush administration policies allow corruption? Massachusetts Democratic candidate for governor Robert Reich and Republican Sen. George Allen step into the "Crossfire" with hosts James Carville and Tucker Carlson to debate this.

CARLSON: Now you've heard the argument taking place here between the senator and James Carville about, you know, the 1990s, essentially the Clinton years, and the idea [that] the Clinton administration tried hard to crack down on corporate abuse -- and they [Democrats] knew the system was teetering precariously, but Republicans, the meanies, somehow derailed that reform.

My question to you, as a former member of the Clinton administration: Why didn't somebody sound the alarm? If the Clinton people knew that this was going on, why didn't somebody tell investors about it?

REICH: Well Tucker, I don't think anybody, frankly, knew about it. I think that the SEC [former chairman Arthur] Levitt did try to do more. There was a lot of suspicion that shenanigans were going on.

But honestly, nobody believed the degree to which accounting firms were lying, turning the other way, the other direction, the degree to which company executive CEOs were running off with the loot. I don't think most people even conceived that this was going on, or even possible.

We needed to have reforms. The Clinton administration clearly pushed for reforms. Had we known of the extent of, well, of just the misuse of authority and the malfeasance, the nonfeasance, obviously the American public would have been behind us and we would have got reforms.

CARLSON: So in other words, you're saying it was ignorance rather than negligence?

REICH: I don't even think it was ignorance. I don't think anybody imagined the extent of the damage.

Enron looked, even when Enron came out, honestly Tucker, you know as well as I, we all looked at Enron, we thought, gee, this is one example, maybe it's a bad apple. And then the president said, oh, you have a few bad apples after we learned about WorldCom and we learned about Global Crossing.

And then suddenly Adelphia and more and more and more of these companies looked like they were following, basically, the same rules of misconduct generated by accounting firms and by CEOs who just didn't care, didn't have any sense of public responsibility at all.

Now look, I want to make it clear, I think this legislation signed today is a good first step in the right direction. I think we ought to congratulate everybody for bipartisanship.

But let's understand it is only a first step. And Democrats have got to continue, and Republicans have got to continue, making sure and monitoring -- making sure the corporations are towing the line.

CARVILLE: Senator Allen, let me give you a chance to respond to the secretary's brilliant, if somewhat lengthy response here. So, in the interest of fairness...

ALLEN: Well, I think he recognized that this is positive. And I think he also recognizes that the senior senator from Massachusetts, Ted Kennedy, also voted to override the president's -- President Clinton's veto.

I think that the American people don't want to see a bunch of blame and finger-pointing and saying, it's the Clinton administration's fault, or the Bush administration's fault. They want to see what is being done to restore credibility, honesty and integrity to our system.

CARVILLE: Well it's pretty clear that it's the Republicans' fault. But then again, Republicans never point fingers.




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