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President Bush Set to Make Speech About Corporate Responsibility

Aired July 09, 2002 - 11:02   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.
AARON BROWN, CNN ANCHOR: It's a long and troubling list of well- known companies that have become even more well-known in the last several months, the Enrons, the WorldComs, the Qwest, Tyco, Global Crossing, Halliburton, a company the vice president once ran, and the list goes on, and every one of them is under investigation for questionable accounting methods; in the case of WorldCom, huge accounting irregularities, $4 billion almost. Some are smaller. But all difficult for investors and employees and for the president of the United States.

Mr. Bush took office at the country's first MBA president, a believer in business, a long opponent of regulation. So this is not an easy issue for the White House. Just yesterday, the president had to defend his own behavior when he was on the board of a Texas oil company more than a decade ago.

As the president himself says, sometimes things are not exactly black and white in the corporate world. We begin our coverage now with our senior White House correspondent John King with the president on Wall Street.

John, get us started by talking a bit about what the White House hopes to accomplish today.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Well, Aaron, what the president hopes to accomplish today is to convince the American people that he can and will lead the charge against corporate corruption and for corporate reform, and to convince the Congress that it should work with him in a bipartisan fashion. Quite quickly, in the last 30 minutes or so, we've seen some very tough rhetoric from Democrats that suggests they see a political issue here, and they, at least at the moment, are prepared to confront and object to the proposals Mr. Bush will put forward today here on Wall Street.

You were talking a moment ago about WorldCom and Enron, and between those two companies, more than 20,000 jobs lost. That is a concern to any president. When Mr. Bush took office the Dow Jones industrial average was at 10,587. The markets opened today with the Dow Jones at 9,274. Any president knows his own standing in the United States tied to the strength of the economy. Mr. Bush facing his first domestic political crisis, if you will, since the September 11th attacks. On Wall Street today, on the one hand, he will lecture corporate leaders that they must cleanup their own act and have a new code of ethics and morality. Mr. Bush also will say the federal government, because of these scandals, though, can and must do more.

Among the proposals, Mr. Bush will call for increased prison time for any corporate leader convicted of fraud. He also wants to strengthen the penalties for mail fraud, document shredding and any other steps involved in obstruction of justice of any fraud probes. To help the government conduct those investigations, Mr. Bush wants $20 million immediately in additional funding from the Securities and Exchange Commission. That would hire 100 new investigators. And he wants Congress to give him next year an additional $100 million. Some of that for more investigators. And the president wants new technology for the SEC as well. And he will propose that independent board to oversee the accounting industry.

Mr. Bush in this speech will say it's time for corporate accounting to be -- quote -- "be taken out of the shadows." It's an effort by the president to restore faith of investors in the stock market and the overall strength of the U.S. Economy. But, again, Aaron as we've seen, it's not just a policy debate the president will try to lead today. This is a very highly charged political atmosphere now. It is the number one political issue in the view of both parties. We are but a few months away from the midterms election. Republicans counting on their president to lead the charge. Democrats say because of his own past dealings in business that Mr. Bush is incapable of doing so.

BROWN: John, the president talked about some of these issues when the Enron collapse first become a major news story. How much evolution in both president's thinking and the White House policy has there been since then?

KING: Evolution in the policy that tougher criminal penalties he will propose today for any CEOs and top company officials involved in fraud, evolution in the policy includes the new money for the Securities & Exchange Commission, which a few months back the administration said it didn't believe was necessary. New policy as well in this new agency to oversee the insurance industry. So some differences with the Democrats on that.

In terms of the administration's overall thinking, it is the fallback position of this administration when Democrats say this president is not proposing enough. This president is only reacting, not leading. The president's argument is, as you noted, after Enron, he did put a 10-point plan on the table. His point would be that Congress is the one that's behind the curve here, not the Bush administration.

BROWN: And quickly, because I want to bring Lou into this conversation, is the president's position today closer to the Senate Democratic position or the House Republican position?

KING: I guess if you went through proposals, he's slightly closer to House position still, but again, we were discussing this last night I believe, this now very much like the campaign finance reform debate. The president will sign any piece of legislation that clears the Congress with a significant bipartisan majority. Make no mistake about it, he will use this speech today and the weeks ahead to try to put imprint on this plan. This is now the number one issue in the country. Republicans are counting on this president to lead the charge for them in election year.

On paper right now, he is somewhat closer to the House legislation, but moving closer by the day, as is the Republican Party, to that legislation being proposed by Democrats in the Senate.

BROWN: John, thank you, our senior White House correspondent John King on wall street. We will talk to John as our coverage goes on.

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