Dateline: 03/08/02

Hoping to fend of future corporate debacles like the collapse of Enron, President Bush yesterday proposed new regulations to improve corporate responsibility and help protect employees and investors by regulating the activities of corporate executives and accountants.

"Reform should begin with accountability, and reform should start at the top," stated Bush. "Business people must answer not just to the demands of the market or self-interest, but to the demands of conscience."

Noting that corporate laws are made by the states, Bush added, "Washington has responsibilities, as well, and called on the Securities and Exchange Commission to take action. "Existing regulations should be clearer; penalties for wrongdoing should be tougher," said the president. "Reform should improve investor confidence and help our economy to flourish and grow." 

In a separate policy statement, the White House detailed President Bush's ten-point plan to "improve corporate responsibility and help protect America’s shareholders," as guided by three core principals: 1) providing better information to investors; 2) making corporate officers more accountable; and 3) developing a stronger, more independent audit system. Specifics of the plan ranged from regulations punishing abuse of power by corporate officers to the creation of a new independent government agency to regulate the accounting profession.

President's Ten-Point Corporate Responsibility Plan

1. Each investor should have quarterly access to the information needed to judge a firm’s financial performance, condition, and risks. 
2. Each investor should have prompt access to critical information. 
3. CEOs should personally vouch for the veracity, timeliness, and fairness of their companies’ public disclosures, including their financial statements. 
4. CEOs or other officers should not be allowed to profit from erroneous financial statements. 
5. CEOs or other officers who clearly abuse their power should lose their right to serve in any corporate leadership positions. 
6. Corporate leaders should be required to tell the public promptly whenever they buy or sell company stock for personal gain. 
7. Investors should have complete confidence in the independence and integrity of companies’ auditors. 
8. An independent regulatory board should ensure that the accounting profession is held to the highest ethical standards. 
9. The authors of accounting standards must be responsive to the needs of investors. 
10. Firms’ accounting systems should be compared with best practices, not simply against minimum standards.
    [Source: White House Fact Policy Statement]

"Through stricter accounting standards and tougher disclosure requirements, corporate America must be made more accountable to employees and shareholders and held to the highest standards of conduct," said Bush.

"Existing regulations should be clearer, and penalties for wrongdoing should be tougher. Reform should improve investor confidence and help our economy grow ... without inviting a rush of new lawsuits that exploit problems instead of solving them," stated the president.

While many of the new regulations proposed in President Bush's plan fall within the current powers of the SEC, banning individuals from serving in corporate leadership positions would require Congress to pass new laws.

In Congress, Senate Majority Leader Tom Daschle of South Dakota, has criticized Bush's proposals as not doing enough to punish rule-breaking corporate leaders or protect investors.

An 'Era of Responsibility'
In the closing remarks of his speech at the Malcolm Baldrige National Quality Award Ceremony, President Bush stated, "America is ushering in a responsibility era; a culture regaining a sense of personal responsibility, where each of us understands we're responsible for the decisions we make in life. And this new culture must include a renewed sense of corporate responsibility."