Corporate Scandals:
Apart from a weak accounting bill the House passed in April and the Justice Department's successful lawsuit against Arthur Andersen, we haven't seen much legal or legislative fallout yet from the wave of corporate scandals. That could change this week as the Senate votes (later today) on the Sarbanes accounting bill, which is expected to pass. A conference with the House would follow, and only then will the public find out if a tough law will be enacted.
It's still unclear whether the Sarbanes bill, while certainly tougher than the House bill, is tough enough. John McCain appeared on NBC's Meet the Press and blamed both Republicans and Democrats for blocking his stock-options provision from being added to the Senate bill. He also blamed "the swarm of lobbyists" who descended on Capitol Hill when they heard stock options were in danger. But On ABC's This Week, Joe Lieberman defended his opposition to the stock options provision and his broader "pro-business" stance. Lieberman claimed that if stock options became regulated, "[T]he number of options granted would be reduced dramatically. And I am absolutely convinced that the people who would not get the options are the middle-class workers, the middle managers, the secretaries, the folks on the line who get the options. The CEOs would continue to take care of themselves."
Lieberman's comment came even after host George Stephanopoulos cited a report from the National Center for Employee Ownership, which found that "70 percent [of stock options] went to executives and 50 percent went to the top executives." (This Times article suggests Lieberman may be changing his position on stock options, but on This Week he maintained his earlier opposition to the measure.) Meanwhile, on Meet the Press, Sarbanes himself said that we should wait for the Federal Accounting Standards Board (FASB) to make a recommendation on stock options. McCain, however, claimed that in the past, the board had been "bullied" out of making such a recommendation by the accounting industry.
Resignations?
The best spin of the weekend came from Commerce Secretary Don Evans on This Week. Asked to comment on Bush's already-infamous quotation -- "sometimes things aren't exactly black and white when it comes to accounting procedures" -- Evans explained, "The president was clearly pointing out that the accounting standards in this country are far too complicated and need to be simplified so people can understand the financial statements of America." Funny, we thought he was defending his questionable accounting procedures.
Amid calls for his resignation, Securities and Exchange Commission Chairman Harvey Pitt defended himself and his record on Meet the Press. Much had been made of Pitt's recusing himself from 29 decisions in his first 11 months because of conflicts of interests involving previous clients. Pitt claimed, however, that such recusals were standard for SEC chairmen in their first year and that he had fewer recusals than his predecessor. On "Fox News Sunday," Arthur Levitt and Richard Breeden, Pitt's two predecessors, both defended Pitt. Levitt, chairman from 1993 to 2001, talked about "an almost two-decade-long erosion of ethical values on the part of the business community, where more and more companies have either approached the line or gone over the line in terms of giving it straight to the American investor." Breeden, chairman from 1989 to 1992, was asked if he agreed with one mutual fund analyst's assessment that "99 percent plus of the companies do a very good job" of honest accounting. Breeden replied, "my level of skepticism is a bit higher than that."
Pitt, meanwhile, also claimed his SEC had been the toughest ever, bringing more actions against dishonest companies and traders, and recovering more money than any previous SEC. But Pitt declined to come out clearly in favor of legislation that would forbid an accounting firm from providing both accounting and auditing work for the same company (as, for example, Andersen did for Enron). Neither would he lend support the stock options provision. Pitt praised Sarbanes, calling his Senate Banking committee hearings "a model of legislative investigation," but backed away from lending full support for it. We'll have to "see what's in it" after amendments, he said.
There's a chance that we might see the resignation of Army Secretary Thomas White as early as this week. White is scheduled to testify before the Senate Commerce Committee, and there are rumors that he will take the Fifth Amendment rather than answer some tough questions about his behavior as head of an Enron energy trading unit. On This Week, House Energy and Commerce Committee Chairman Billy Tauzin, a Republican, said, "No government official working for this administration ought to go before a committee of Congress, House and Senate, and take the Fifth. That ought to be a absolute no-no."
Iraq:
In the latest round of the anti-Saddam bravado contest on This Week, Joe Lieberman expressed dismay over continuing leaks to the press about planning for an invasion of Iraq on This Week. The report in question is a recent USA Today article suggesting that the Bush team was waiting for further provocation to justify an attack on Iraq. Lieberman said that if true, the report would mean Bush was reversing his previous statement granting himself the right to make pre-emptive strikes. "He's given us enough provocation," Lieberman said of Saddam Hussein.
Presidential Rumors:
On Meet the Press, John McCain denied with a chuckle rumors that he's considering running for president either as an Independent or as a Democrat. On This Week, Lieberman said Gore had not promised to make him his running mate if Gore runs for president again in 2004.
