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President Signs Anti-corruption Legislation

Aired July 30, 2002 - 14:16   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

KYRA PHILLIPS, CNN ANCHOR: President Bush says the bottom line of the new truth-in-accounting law is simple: No more easy money for corporate criminals. With considerable fanfare, but without any captains of industry, the president enacted a crackdown intended to take some of the tarnish off the blue chips.
CNN's Suzanne Malveaux is live from the White House with more details.

Hi, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hi, Kyra.

It's all a part of the administration's effort to win back the confidence of the American people, to bring them back to the stock market. The strategy of the White House has been consistent, twofold, really proving that they're cracking down on corporate fraud through this legislation, but also emphasizing the positives of the economy.

That was really this morning at the East Room of the White House that the president signed into law what is being called the Sarbanes- Oxley Act of 2002. He did with Democratic and Republican lawmakers, as well as members of his Cabinet and members of his corporate fraud task force. It was all in an effort to show bipartisan unity behind the legislation.

And this was introduced by Senator Paul Sarbanes, a Democrat. It was really a lot tougher than the administration had initially envisioned.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This new law sends very clear messages that all concerned must heed. This law says to every dishonest corporate leader, You will be exposed and punished. The era of low standards and false profits is over. No boardroom in America is above or beyond the law.

(END VIDEO CLIP)

MALVEAUX: Now, some of those key provisions, Kyra, are included -- an oversight board for the accounting industry: up to 25 years in prison for securities fraud, for those who actually are convicted of that. CEOs and CFOs -- chief financial officers -- to certify their financial statements, a requirement, a new requirement.

Now, you may realize that this legislation really passed with lightning speed. That is because there was an incredible amount of pressure on the administration and Congress to come up with some sort of agreement. They were looking at these series of corporate scandals and these triple-digit drops in the stock market for the last two weeks. They really thought they needed to put something on the table, and to do it right away.

They also not only acknowledged the economic cost, but the political cost as well. Neither party wanted to be linked with this type of decline in the economy. The latest poll, "USA Today" poll, as well as CNN, shows, in fact, that 65 percent of Americans say that Republicans are more concerned with the interest of large corporations. They believe 36 percent say Democrats are actually indeed interested in that. Neither really party wanting to see the fallout of this, to be linked with these type of scandals.

And also I should mention as well we are not completely out of the water. The administration has asked the CEOs of the top 1,000 companies to certify their books to make sure that they are correct. That's due in a cup of weeks, mid-August.

I talked to Senator Sarbanes earlier today, who says, yes, he's worried there are going to be some more bad apples that are going to come out of that. But he also says that this legislation is specifically designed to prevent that from happening.

(BEGIN VIDEO CLIP)

SEN. PAUL SARBANES (D), MARYLAND: Once you have a bad apple to punish, much of the damage has been done, by definition. Because you have a bad apple, bad things have happened. We want to tighten up the system and improve the system so the bad things don't happen to begin with, so people don't lose their investment.

(END VIDEO CLIP)

MALVEAUX: And that's what the administration wants as well. They want the investors to come back and invest in the stock market again -- Kyra.

PHILLIPS: We'll see if those tough penalties make a difference.

Suzanne Malveaux, thank you.

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