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Bush Signs Corporate Accountability Law
Aired July 30, 2002 - 10:14 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: We want to go to the White House, because the event there with President Bush is about to get underway.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Thank you very much. Welcome to the White House. And welcome to this historic occasion.
During the past year, the American economy has faced several sudden challenges and proven its great resiliency. Terrorists attacked a center and symbol of our prosperity. A recession cost many American workers their jobs. And now corporate corruption has struck at investor confidence, offending the conscience of our nation.
Yet, in the aftermath of September the 11th, we refused to allow fear to undermine our economy, and we will not allow fraud to undermine it either.
With well-timed tax cuts, we fought our way out of recession and back to economic growth. And now, with a tough new law, we will act against those who have shaken confidence in our markets, using the full authority of government to expose corruption, punish wrongdoers and defend the rights and interests of American workers and investors.
My administration pressed for greater corporate integrity. A united Congress has written it into law. And today, I sign the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.
This new law sends very clear messages that all concerned must heed. This law says to every dishonest corporate leader: You'll be exposed and punished. The era of low standards and false profits is over. No board room in America is above or beyond the law.
This law says to honest corporate leaders: Your integrity will be recognized and rewarded, because the shadow of suspicion will be lifted from good companies that respect the rules.
This law says to corporate accountants: The high standards of your profession will be enforced without exception. The auditors will be audited. The accountants will be held to account.
This law says to shareholders that the financial information you receive from a company will be true and reliable, or those who deliberately sign their names to deception will be punished. This law says to workers: We will not tolerate reckless practices that artificially drive up stock prices and eventually destroy the companies and the pensions and your jobs.
And this law says to every American, there will not be a different ethical standard for corporate America than the standard that applies to everyone else. The honesty you expect in your small businesses or in your workplaces, in your community or in your home will be expected in force in every corporate suite in this country.
I commend the Congress for passing a strong set of reforms. I particularly thank Senator Paul Sarbanes and Congressman Mike Oxley. Both are very thoughtful and were persistent voices for reform. They are true advocates of corporate integrity. I appreciate their working together to send a signal to the rest of the country that it's possible in Washington, D.C., to set aside partisan differences to do what's right for the American people.
I also appreciate the bipartisan leadership in the Congress. I particularly thank Senator Daschle and Senator Lott, who are with us here today.
I want to thank members of my Cabinet who worked on this bill, Secretary of Treasury O'Neill and Attorney General Ashcroft, Secretary Evans, Secretary Chao.
I appreciate the FBI director being here, along with the chairman of Securities and Exchanges Commission, Harvey Pitt.
I appreciate the Corporate Fraud Task Force members who are here, and I want to assure the American people they're just getting started.
America's system of free enterprise, with all its risk and all its rewards, is a strength of our country and a model for the world. Yet free markets are not a jungle in which only the unscrupulous survive or a financial free-for-all guided only by greed. The fundamentals of a free market -- buying and sell, saving and investing -- require clear rules and confidence in basic fairness.
The only fair risks are based on honest information. Tricking an investor into taking a risk is theft by another name.
Corporate executives must set an ethical tone for their companies. They must understand the skepticism Americans feel and take action to set clear standards of right and wrong.
Those who break the rules tarnish a great economic system that provides opportunity for all. Their actions hurt workers who committed their lives to building the company that hired them. Their actions hurt investors and retirees who place their faith in the promise of growth and integrity. For the sake of our free economy, those who break the rules of fairness, those who are dishonest, however wealthy or successful they may be, must pay a price.
Today we are taking practical steps to encourage honest enterprise in our nation. Under this law, CEOs and chief financial officers must personally vouch for the truth and fairness of their company's disclosures. Those financial disclosures will be broader and better for the sake of shareholders and investors.
Corporate officials will play by the same rules as their employees. In the periods when workers are prevented from buying and selling stock in their pensions or 401(k)s, corporate officials will also be barred from any buying or selling.
Corporate misdeeds will be found and will be punished. This law authorizes new funding for investigators and technology at the Securities and Exchange Commission to uncover wrongdoing. The SEC will now have the administrative authority to bar dishonest directors and officers from ever again serving in positions of corporate responsibility. The penalties for obstructing justice and shredding documents are greatly increased. Corporate crime will no longer pay.
CEOs who profit by betraying the public trust will be forced to return those gains to investors. And the maximum prison term for common types of fraud is quadrupled from five to 20 years.
For the first time, the accounting profession will be regulated by an independent board. This board will set clear standards to uphold the integrity of public audits and have the authority to investigate abuses and discipline offenders. And auditing firms will no longer be permitted to provide consulting services that create conflicts of interest.
This law gives my administration new tools for enforcement. We will use them to the fullest. We will continue to investigate, arrest and prosecute corporate officials who break the law.
The Corporate Fraud Task Force I established is now hard at work, overseeing investigations of alleged fraud and insider trading. More than 200 federal prosecutors are at work detecting and punishing corporate crimes. Every corporate officials who has chosen to commit a crime can expect to face the consequences. No more easy money for corporate criminals, just hard time.
As the work of enforcement proceeds, I hope Congress will join me in other important efforts to protect the savings and investments of Americans preparing for retirement. We've seen how workers can lose a lifetime of savings overnight, locked into pension plans without adequate choices and information. Workers should be able to sell company stock and diversify into other investments after three years in their own company's plan. They should receive updates on their retirement accounts not once a year, but every three months. They should have access to sound investment advice. I have proposed pension protection reforms, the House has passed them, I hope the Senate takes them up soon.
We must also work together to promote more growth in the economy and jobs for the American people. The fundamentals of our economy are sound. After all, sales of automobiles and new houses are on the rise, new unemployment claims have been falling since April, inflation is low, productivity is increasing and growth continues. These are signs of strength in our economy, and with the right policies, we can build on them. We must continue to work to control federal spending and make the tax cuts permanent so Americans can save and plan for their own future. We must tear down trade barriers so people everywhere can buy American. We must make terrorism insurance available to spur more construction. And on energy, we must encourage conservation through new technology and produce more energy at home to give our economy safe and steady sources of power and make our country less reliant upon foreign sources of power.
The attacks against our economy in the last year have caused deep hardship and highlighted the economy's fundamental strength. The American economy is more diverse and more innovative than ever before. And its greatest strength, the people who make it work, are better trained and more productive and more highly skilled than ever before.
Whenever we face challenges, from the fear that threatened our economy after September the 11th to the fraud that threatens investor confidence today, we've tackled them head on.
The American economy depends on fairness and honesty. The vast majority of businesses uphold those values. With this law, we have new tools to enforce those values, and we will use those tools aggressively to defend our free enterprise system against corruption and crime.
It is now my honor to sign the Sarbanes-Oxley Act of 2002.
HARRIS: President Bush there congratulating there the bipartisan leadership there, with the Senate for this corporate responsibility, corporate accountability law that he just signed, this Sarbanes-Oxley bill. And he says that business and markets should be about fair risk based on honest information, tricking investors with less than that is theft by any other name. He says those that break the rules tarnish the system, and he went on to say, they must pay a price. CEOs must now personally vouch for disclosures made by their corporations, and any misdeeds will be found and punished. And to make that happen, the SEC will be beefed up with extra authority and staffing it make that happen.
And he says, no more easy life for corporate criminals, just hard times -- Daryn.
KAGAN: We are lucky enough on this day to have with us a visit from our senior political correspondent Candy Crowley, who's paying a visit to CNN global world head quarters here in Atlanta.
CANDY CROWLEY, CNN CORRESPONDENT: Thank you. It's good to be here.
KAGAN: Our little abode. It's nice to be able to watch an event in Washington with one of the professionals here. Politically, let's talk about what is happening here. The bill the president just signed, a lot tougher than Republicans wanted, even a couple of months ago, while this was floating through Congress.
CROWLEY: Yes, I think what we sot of have to remember, at end of the day, a bill is a bill and the president is the one signing it. Presidents, being they Democrats or Republicans, get the credit for bills they sign. So insofar as this bill does something to reassure investors that things are getting better, in the end, the president gets the credit.
KAGAN: If you look at who is there, they gave us a list of who's attending this signing. I think you are the only one in Washington not there. There are no CEOs, but in terms of politically, everybody wants to be associated now with this effort of, we're going after those bad guys in big business.
CROWLEY: Absolutely. And what's really interesting to me, and Leon touch on it in his summary, is how many times they talked about, we're going to use the full authority of the government. Those who, you know, break the law will be exposed an punished. Tricking the investor is theft. No more easy money, just hard time. Lots of sort of, we're going to get you, stuff.
One of the things I've learned, you know, in the past couple of weeks talking to Republicans and Democrats saying, look, this is a good law, and it'll help around the edges, but what we really node to do to send a clear signal is put some of these people in the slammer. I think that's what you are hearing here, is this is a nice law, but slammer, slammer, slammer. Someone will have to deliver, but I think they will be very tough.
KAGAN: We saw how the markets responded and how investors responded when the Rigas family with the Adelphia video went on that video, played over and over again of them being led off in handcuffs. People want to see a big cat go to prison.
CROWLEY: And it wasn't happenstance that the cameras were there at 6:00 a.m. in the morning, let's face it.
KAGAN: It's funny how that works.
Another question here politically, with the parties, each one has to be kind of careful. Republicans, I think, obvious, don't want to be associated necessarily as the big business party. But this isn't a freebie for the Democrats either.
CROWLEY: No, I mean, you heard this from Joe Lieberman yesterday who was up at the Democratic Leadership Council meeting, and these are the moderate Democrats who made the Democratic Party more mainstream. Bill Clinton was one of their own. And part of that was by being friendlier to business. And Joe Lieberman sent out a clear warning yesterday, saying let's, you know, let's not attack business, this isn't about bad business. So Democrats have to be careful not to be seen as anti-business.
HARRIS: What I have to worry about is the fact that the White House and many Republicans were very late coming to this party. They pretty much had to get dragged into it, and a lot of folks don't think they got there until the markets went south big time in the past couple of week. How genuine do you think the conversion is? Is it all because this election year coming up, or what?
CROWLEY: Everybody is, you know, swayed by election years, non- election years. There's always politics to everything. Look, I think that in the end, Republicans are by nature anti-more regulation. That's just what they are. They're for free enterprise, and let it -- letting it be as free as it can be.
On the other hand, this got worse and worse and worse, and the markets began to respond. And again, so did those whose main thing is, let's not overburden. Again the Republicans I talked to said we don't want to go so far that we stifle, you know, the creativity and that we -- people don't want to have anything to do with the books in a corporation. Let's put bad people in the slammer, but let's let commerce, you know, still go on.
How sincere is it? I don't know. I mean, they signed it. It's there. And again, I mean, I think it matters. That picture you just saw matters, signing the bill.
HARRIS: The reason the question occurs to me because you keep saying it keeps coming back to somebody big having to serve some time big time here. So if the conversion isn't necessarily that genuine, if it's not really that deep felt, how strong the support in making sure that someone big does go down?
CROWLEY: I think very strong, because there's a difference between do you want more regulation, and do you want bad guys to go to jail? I think everybody that's described the president said, look, he's genuinely offended by the real travesties that have gone on. Does that necessarily mean that he wants more and more regulation? Not necessarily. Because that's not sympatico with sort of Republican ways. Is he against what's going on, and the kind of fraud and lying to investors, absolutely. So putting him in the slammer -- and this bill, I think, you know, you'd had to judge as sincere, unless otherwise proven.
KAGAN: We'll be watching and also watching the markets.
Candy Crowley, a pleasure to have you with us.
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