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CNN Sunday Morning

Interview With Melissa Hart, John LaFalce

Aired July 14, 2002 - 11:13   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.
FREDRICKA WHITFIELD, CNN ANCHOR: More on corporate responsibility now and Congress' role beginning as early as, possibly, tomorrow with the Senate voting on aversion. Joining me now, two guests, congressional members from Buffalo, New York, Representative John LaFalce -- thanks for joining us -- and Representative Melissa Hart in Pittsburgh.

Well, Representative Hart, let me begin with you. Already the House has passed one version. The Senate could be voting as early as tomorrow. What's the difference between the two?

REP. MELISSA HART (R), PENNSYLVANIA: Well, we don't know completely. At this point, the Senate's original bill was very similar to ours. I think the Senate waited a few months. So we passed our bill in April. They waited to work on the bill until after WorldCom. The major differences really aren't going to matter right now. I think what the Senate will do for us is to get us a conference so that we actually get a new law.

WHITFIELD: And Representative LaFalce, you'll be heading that conference once it comes to that. What are looking for in the most effective bill or legislation that will address the problem of corporate responsibility and also address the issues that so many investors have?

REP. JOHN LAFALCE (D), NEW YORK: Well, first of all, I'll just be leading it for the Democrats in the House of Representatives.

WHITFIELD: Correct.

LAFALCE: Secondly, there is a world of difference between the bill that passed the House and the bill that's going to be passing the Senate. The bill that passed the House, basically referred to as the Oxley Bill, was terribly weak, terribly cosmetic. I offered alternative after alternative in committee -- in the Rules Committee, on the floor of the House. And in each and every instance, my amendments, my substitutes, were rejected in favor of a cosmetic approach.

Senator Sarbanes took up the approach that I had advocated, that the Republicans had monolithically voted against repeatedly. And so, it's my hope that when we go to conference, we will certainly emerge with the infinitely stronger Senate bill, which is real reform rather than the cosmetic approach that passed the House. WHITFIELD: Well, Representative LaFalce, are you at least pleased with hearing Bush's plan to reforms or his requests that there should be more jail time, that the corporate leaders should be held accountable or do you feel like -- investors feel like they want to hear a little bit more as to what is going to take place now for those who are allegedly showing their irresponsibilities on the corporate level, costing so many people their 401(k)s?

LAFALCE: Yes, President Bush has been woefully disappointing. First of all, after Enron, he had the occasion in his State of the Union address to really discuss the difficulties in corporate America. He squandered that opportunity. He had an opportunity in February, when he submitted his budget, to come up with significant increases in human resources and technology resources for the SEC. He squandered that.

This past Tuesday, he lacked creditability. He had great credibility after the terrorist attack. The public believed him because he really said what he meant and meant what he said. That wasn't true this past Tuesday at all.

HART: As far as the House bill goes, first of all, I can't sit here and listen to this. This was an overwhelmingly bipartisanly passed bill. In fact, I think over 119 Democrats in the House supported this bill. This reform does everything that the president asked for. The original Sarbanes Bill was almost identical to our bill. Sure, they had a day of amendments that passed all kinds of things, but they really don't significantly change the goal of this bill.

And I think, actually, Mr. LaFalce, that the bill is the same...

LAFALCE: Well...

HART: Our goal is to make sure that investors can have the confidence that the companies they invest in are disclosing.

LAFALCE: Melissa, you just factually...

HART: That's what our bill does.

WHITFIELD: Representative Hart, you're seeing...

HART: ... and that's what we'll do.

WHITFIELD: You're seeing this labeling -- Representative Hart, you're seeing this labeling as a politically driven one then.

HART: Well, the Senate waited and waited and waited until they passed the bill at all. The House took the bull by the horns and we passed the bill early. We passed the bill that does what the people needed. It requires a disclosure. It allows us to go back and get the ill-gotten gains back from those executives who cheated. We need to pass legislation and get it done. I'm glad the Senate's moving the bill. That will get us to conference. But these comments from Representative LaFalce are just unjustified. WHITFIELD: Well, Representative Hart, let's talk about the credibility issue because that also seems to be what is at stake, with demands being made from House and Senate leaders saying that President Bush's full disclosure of all of his records need to be made public. And then you have, of course, Halliburton with Vice President Cheney and now even Tommy Thompson's -- his -- Larry Thompson rather -- I'm sorry -- his dealings are now at question, too.

So the American people are already expressing that they're seeing a major credibility problem in the Executive Branch of our government. So why is it that they should feel that -- why should they feel there's confidence in Congress as well?

HART: But the media and some funded, Democrat-funded organization call into question these issues. If the Republican side did an extensive investigation of the holdings of others in either companies that were held, we might find that those executives did something, as well. That's not the issue here. People are trying to take us away from what we're trying to do. Our goal is to make sure that investors are safe, that the money they put in for their retirement is guarded, that the SEC gets more money and will enforce the laws.

I think everyone agrees -- and I heard Representative LaFalce say, the SEC needs more money. I agree with him wholeheartedly. I think everyone does.

We passed legislation in June that will make sure that the SEC is authorized to move forward with this.

LAFALCE: If I could...

HART: So I see us moving forward. If we get bogged down in all of these personal issues with other companies, I think that's going to slow us down.

WHITFIELD: Well, Representative LaFalce, isn't credibility certainly an issue because if we are talking about protecting people's money, shouldn't the people who are watching the rules, who are making the rules in which to protect the money also be on the up and up?

LAFALCE: Well, credibility is extremely important. That's one of the difficulties with last Tuesday's speech by the president. It was lacking in credible unlike his speech on terrorism.

Secondly, Mrs. Hart is unfortunately, simply factually wrong on virtually every single issue she discussed. I gave her ample opportunity within committee to vote to beef up the budget of the SEC and she voted against it.

HART: The point is...

LAFALCE: Well...

HART: The point is...

(CROSSTALK)

HART: ... that what Mr. LaFalce wanted to do was put everything in law and have the Congress do the oversight personally. We have placed the SEC...

LAFALCE: I did want to codify into law all the enforcement mechanisms that are necessary and I wanted to do this a year-and-a- half ago. In each and every instance, the Republicans monolithically voted no.

When it comes to beefing up the budget, the president now has called for a 20 percent increase in the budget. Even the past Republican chairman of the SEC, Laura Unger, said this was woefully inadequate. I called for a 200 to 300 percent increase. The Republicans voted against that. We did admittedly pass a 65 percent increase. The president, last Tuesday, called for a 20 percent increase. He's still way behind the times.

(CROSSTALK)

WHITFIELD: Well, Representative LaFalce, let me interrupt you for a second because Representative Hart, how much of the attention should be paid on modifications in auditing? Should auditors, auditing firms, also be the ones who are offering advice as well as auditing?

HART: Well, our -- no, they shouldn't be. And in fact...

LAFALCE: Well, then why did you vote against the amendment...

(CROSSTALK)

WHITFIELD: Should that then be part of the plan?

LAFALCE: It certainly should be part of the plan.

HART: It is part of the plan.

LAFALCE: No, no, no. What they did was basically codify the status quo. When I offered an amendment to separate the auditing and consulting functions, the Republicans voted against it. When I offered...

HART: Again, your definition of separating the functions is ...

LAFALCE: ... to specify what the powers of the accounting board should be, they voted against it. When I offered an amendment to specify who the members of the auditing board should be...

WHITFIELD: Well, perhaps Representative LaFalce and Representative Hart, if you're both agreeing on that matter for now, then perhaps there's some hope in that conference committee to include certain measures that you do agree upon.

HART: Those measures are actually are in the...

LAFALCE: Let's accept...

WHITFIELD: Well...

LAFALCE: Let's accept this...

WHITFIELD: All right, well, we're out of time right now, but we can continue this debate. But we'll watching it as this debate will be unfolding on Capitol Hill at least this week.

Thank you very much, Representative Hart and Representative LaFalce...

HART: Thank you.

LAFALCE: Thank you.

WHITFIELD: ... for joining us.

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