Update: Better Bookkeeping
[Sorry, the video for this story has expired, but you can still read the transcript below. ]
KWAME HOLMAN: Even though President Bush was speaking to an audience at the University of Alabama, Birmingham this morning his message was aimed at assuring investors nationwide.
PRESIDENT GEORGE W. BUSH: I’m willing to work with Congress to make sure that we’ve got the necessary law in place that will hold people accountable without stifling the entrepreneurial spirit of America — without stifling innovation in America. (Applause)
Corporate America must make the decision each as an individual that you’re going to uphold high standards; that you have a responsibility to our society; that you’ve got the responsibility to your shareholder and your employee to treat both with the respect they deserve.
KWAME HOLMAN: Nevertheless, the stock market slide that began with this morning’s opening bell continued right through the President’s speech and well after.
SEN. HARRY REID: Is the Senator aware of where the stock market is, as of now the Dow is down 338 points.
SENATOR: I was not aware.
KWAME HOLMAN: On the Senate floor Michigan’s Arthur Levitt argued for tougher accounting laws.
SEN. CARL LEVIN: It shows the additional urgency as to why we should do everything in our power to restore public confidence in the financial systems in this country.
KWAME HOLMAN: As the Senate moved toward a final vote on corporate accounting reform legislation, Democrat Levin and Arizona Republican John McCain resumed their attempts to rein in the corporate practice of giving top executives stock options without counting them as an expense. McCain had been thwarted in his attempt to ban the practice outright. Levin wanted at least an independent accounting board to review the issue and adopt a standard within one year.
SEN. CARL LEVIN: What my amendment would do, would take what is the most sipping post-Enron issue that is left open, which is accounting for these huge amounts of stock options, which go to mainly to executives, and is directing this board that now has an independent source of funding to review, review is the key word, this matter, and to make an appropriate decision within one year.
KWAME HOLMAN: But Levin’s prospects didn’t appear any better than McCain’s.
SEN. JOHN McCAIN: I just wonder if the Senator from Michigan remembers my comments last Thursday when I said to him in an old boxing term, “the fix is in.” There was no vote allowed on my amendment which is a clear-cut, absolutely unequivocal statement about the use of stock options for accounting. Does the Senator really believe that since my amendment was blocked by that side, that your amendment is not going to be blocked by this side?
The fix is in, I say to the Senator from Michigan, and I hope he knows that. This is a terrible mistake, a terrible mistake, because we are not looking at what every observer, we are not addressing what every observer knows is a vital, critical point, aspect of reforming this system, which continues to be so badly eroded in the minds and confidence of the American people and investors, which is over half the American people.
KWAME HOLMAN: But Texas Republican Phil Gramm said a huge glut of amendments was keeping any of them from coming to a vote.
SEN. PHIL GRAMM: To suggest that, well, nothing is standing in the way except a few obstacles to everybody having their will, is to neglect the fact that we’ve got 97 amendments that have been filed as first degree amendments and 24 second-degree amendments, and so therefore by definition, I assume if I suggest and ask unanimous consent that each and every amendment would be voted on, someone would object. Since our leadership has plans for this week and next week.
KWAME HOLMAN: Majority Leader Tom Daschle, however, promised the Levin amendment eventually would come to a vote.
SEN. TOM DASCHLE: One way or the other, we will have a vote on the Levin amendment. It may not be on this bill, this afternoon, if we fail. But our colleagues need to know we will have a vote on this amendment. This will occur, if I have to offer it myself, we will have a vote on this amendment.
KWAME HOLMAN: Levin never did get his vote and several other Senators also attempted in vain, to get votes on their amendments. For instance, North Dakota Democrat Byron Dorgan wanted to require executives whose companies who go bankrupt, to give back all incentives an bonuses they received within the previous 12 months.
SEN. BYRON DORGAN: Let me describe some of the money we’re talking about. We have been holding hearings on the Commerce Committee. Kenneth Lay, 98-present, $1.1 million. Mr. Rice, $72.7 million. This is the Enron Corporation only. Jeffrey Skilling, $66.9 million. Stan Horton, $45 million. Andy Fastow $30 million. They’ve filed bankruptcy with this corporation. They did pretty good at the top. Should some of this be given back? The answer is of course we ought to require that. We ought not to be debating this.
KWAME HOLMAN: However, this evening as the time for the debate on the accounting reform bill wound down, only a handful of non-controversial amendment was acted on. That leaves in place a ban to on personal loans from companies to top officials, a requirement executives certify the corporate accuracy of financial statements and tougher penalties for corporate officials who deceive shareholders and shred documents. Once passed, the Senate bill could be reconciled with a House version as early as tomorrow.