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CNN Live Today

House Passes Corporate Reform Bill

Aired July 25, 2002 - 12:13   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.
KYRA PHILLIPS, CNN ANCHOR: Moments ago, the House passed a bill that calls for severe penalties for corporate executives who commit fraud.

We're going to turn now to CNN congressional correspondent Kate Snow. She is live on the Hill with more on this.

Hi -- Kate.

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Hi, good morning, Kyra.

423 to 3 no votes. That shows you how overwhelming the sentiment here is in the House to pass this corporate reform bill.

There was a weaker bill that the House had passed back in April, but daily disclosures about corporate wrongdoing have really driven the momentum here on Capitol Hill to go ahead and pass something. Last week, remember, the Senate passed a fairly tough bill. Well, they have made it even tougher now in the compromise that's now headed -- already through the House this morning and headed now to the Senate.

The compromise provides for very stiff criminal penalties. We are talking about making securities fraud a crime. We're talking about the penalty for a CEO or a CFO, a chief financial officer, who certifies a false financial report, they could now get up to 20 years in prison, or up to $5 million in fines. Also shredding documents and other crime they are going to deal with, it would get you up to 20 years in jail, if you shredded a document that's important as far as corporate responsibility goes.

In addition, the bill also sets up an independent private sector oversight committee, oversight board, to watch over the accounting industry. It restricts accounting firms their ability to do other work in terms of consulting if they also audit that client's books.

And finally, it calls immediate disclosure of CEOs or executives who sell their stock. It also, by the way, prohibits companies from giving personal loans to their very top officials, a practice that's raised some questions. You may remember President Bush has been questioned about loans that he got when he was with Harken Energy.

Republicans and Democrats alike just a short time ago on the House floor, praising themselves, patting themselves on the back, talking about how they had to get this done.

(BEGIN VIDEO CLIP)

REP. MICHAEL OXLEY (R), OHIO: I am proud of the bipartisan process that produced this legislation. Corporate accountability is an investor and retiree issue. It is not a partisan issue, and those who would attempt to make it so do a real disservice to all of us.

(END VIDEO CLIP)

SNOW: Now, while Chairman Oxley says, it's not a partisan issue, there were certainly some who made it into that. Some Democrats talking about how they would have gotten this done sooner if not for the Republican-led House.

(BEGIN VIDEO CLIP)

REP. MAURICE HINCHEY (D), NEW YORK: It's certainly better than that cream puff legislation that was out here last April, or the fraudulent piece that came out here last week. This is a much better effort and deals, to some extent, to a significant extent, with the real problems that were created as a result of the deregulation mania that swept through this House.

(END VIDEO CLIP)

SNOW: Now, he is referring there to House Republicans leading the way towards deregulation. That's a theme that you have heard Democrats say over and over again, Kyra, that they blame Republicans for having deregulated too much back in the mid-90s.

Republicans, though, say, look, we tried to pass this in April. It's the Senate that didn't act on it. So you've got a little bit of he said-she said going on, Kyra.

But the bottom line is that they are now all in agreement. The Senate expected to take this up tomorrow morning. The president -- or tomorrow at some point. The president has said that he will sign this bill into law -- Kyra.

PHILLIPS: Kate Snow from the Hill, thank you so much.

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