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American Morning

Bush Working to Restore Investor Confidence in Midst of Corporate Scandals

Aired July 11, 2002 - 10:05   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.
DARYN KAGAN, CNN ANCHOR: We'll move on now to the nation's capitol, President Bush working to restore investor confidence in the midst of damaging corporate scandals. He and the vice president are facing questions about their own business dealings, at issue, old loans, and a new lawsuit. Our Kelly Wallace joins us now. She is at the White House with details on this, Kelly, good morning.

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Good morning, Daryn. These are examples of potential political difficulties for the president and the vice president, because Democrats are saying Mr. Bush and Mr. Cheney, when they served as corporate leaders, did not practice what they are now preaching.

First to those old loans, Mr. Bush doing something that was really not uncommon; when he served on the board of directors of Harken Energy, he received two low interest loans, totaling more than $180,000, to purchase shares of Harken Stock.

WALLACE (voice over): White House aides say this was something that was done to encourage directors to have a long-term interest and commitment to the company. But now, Mr. Bush says such loans and such perks must come to an end. Here's what he said on Wall Street on Tuesday.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And, I challenge compensation committees to put an end to all company loans to corporate officers.

(END VIDEO CLIP)

WALLACE (on camera): But hearing those words, Democrats are charging the administration with hypocrisy. White House aides, though, say there's nothing hypocritical here. They say after some recent cases, including the case of WorldCom, where one company director borrowed nearly $400 million from the company, aides say the practice has clearly become abused and needs to come to an end.

There is, though, another potential political headache for this White House, and that has to do with that lawsuit, a lawsuit filed by a conservative watchdog group against Vice President Cheney and the Halliburton Company, the large energy services company, raising question about the company's accounting practices, including when Mr. Cheney served as the company's chief executive officer.

Now, the White House is saying this lawsuit is without merit, but we do know the Securities and Exchange Commission is investigating Halliburton's accounting practices, and aides say they expect the SEC to conduct a thorough investigation but, Daryn, we can tell you some Democrats are starting to utter the words "special prosecutor," raising questions about whether the SEC, under Mr. Bush's pick Harvey Pitt, can really conduct an impartial investigation. Daryn.

KAGAN: Well, interesting that you bring up the SEC and Harvey Pitt, because I was going to ask you about in Mr. Bush's defense of keeping the SEC there. He's defending him. He's standing by him, while they're having calls for his resignation, but meanwhile, you don't really see him. He's kind of on the beach.

WALLACE: He is on vacation, in fact.

KAGAN: Literally on the beach.

WALLACE: Literally on the beach, so he is not out there doing the talk show circuit defending the president's plan. And it's interesting, Daryn, Mr. Bush is certainly standing by Harvey Pitt. Aides say he has really been very aggressive during his term, going after corporate wrongdoing. They're standing by him, and obviously trying to put to rest any calls from Democrats and Republicans who say he must go. Daryn.

KAGAN: Kelly Wallace at the White House, thank you.

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