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Tuesday, 9 July, 2002, 18:55 GMT 19:55 UK
Bush delivers too little too late
President Bush speaks to business leaders gathered at an Association for a Better New York luncheon
Mr Bush's own ethics have been called into question

In a much-anticipated speech addressing corporate fraud, US President George W Bush has laid out his plan for reforms that he believes will re-instil confidence in financial markets.

Bush's remedies
Increase prison terms to 10 years
Strengthen document-destruction laws
Strengthen SEC powers
A ban on loans to execs
Increase SEC budget
Stock exchange reforms

"At this moment, America's greatest economic need is higher ethical standards - standards enforced by strict laws and upheld by responsible leaders," Mr Bush said during a speech delivered to business leaders on Wall Street.

But many of the proposals he presented during his speech on Tuesday were not new and may lead investors to believe his remedy is more of the same.

From strengthening laws to requiring independence amongst company directors and analysts, Mr Bush reiterated themes he introduced earlier in the year following accounting irregularities at now-infamous energy-trader Enron.

The question is are they enough to restore investor confidence.

Congressional outrage

The answer by most analysts is a resounding no, saying the ideas he put forth do not go far enough.

As for investors, they were largely unimpressed with the president's remarks.

The nation's major indexes - the Dow Jones Industrial Average and the Nasdaq - straddled the line between wins and losses throughout midday trading, when Mr Bush spoke.

"A lot of what the president discussed is already in place," says Thomas Ajamie, a Houston attorney who represents corporate clients involved in Enron actions.

A small group of protesters gather near the Wall Street hotel where President Bush was making a speech to business leaders in New York
Protesters took issue with Mr Bush's own investments
"When you talk about lengthening a prison sentence from five years to 10 years that's not the degree of change we need to change the 'club' system."

The idea that corporate executives are privileged group of good ol' boys was a theme hit on time and again during Monday's WorldCom hearings.

Former executives of WorldCom, the latest and largest US firm to reveal that it resorted to creative accounting to boost its bottom line, were thrashed by lawmakers during their appearance before a committee of the House of Representatives.

During that hearing, California Democrat Maxine Waters said the spate of scandals was the product of "the shameful corporate culture of old-boy relationships".

Questionable stock sale

Those critical of Mr Bush's speech on Tuesday say his proposal relies too heavily on corporate America policing itself, a policy that failed in the past.

"I think [the speech] let people down," says securities lawyer Christopher Bebel of law firm Shepherd Smith & Bebel. "He fell well short of the mark."

Mr Bebel says growing suspicion over Mr Bush's own actions is crippling his effort to assuage investors.

"His words have a hollow ring when there's a substantial question as to whether he himself maybe an offender of the very issues he is discussing," says Mr Bebel.

Many unanswered questions remain surrounding the president's sales of stock in Harken Energy in 1990, which Mr Bush tried to brush aside in speaking to reporters on Monday.

The White House has previously acknowledged that US President George W Bush failed to follow the law and disclose details of shares he sold when he was a company director. However, this omission is blamed on a clerical mistake made by company lawyers.

 WATCH/LISTEN
 ON THIS STORY
Scott Cleland, Precursor
"They want to send a very strong message that wrong doers will be punished"
Charles Lewis, Centre for Public Integrity
"Is anyone actually going to be prosecuted?"
WorldCom

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See also:

09 Jul 02 | Americas
09 Jul 02 | Americas
03 Jul 02 | Business
08 Jul 02 | Business
30 Jun 02 | Business
28 Jun 02 | Business
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