In a signing ceremony in the East Room of the White House, the president enacted new legislation that toughens penalties for corporate fraud, establishes an independent accounting board and increases spending for the Securities and Exchange Commission.
Lauding the bill as “the most far-reaching reforms of American business practices” since the Depression, Mr. Bush said the bill would send a strong message urging corporate America to “uphold their responsibilities,” or otherwise be “exposed and punished.”
The legislation quadruples the maximum jail time for corporate executives and auditors indicted for wire or mail fraud, setting sentences at 20 years. The bill also classifies securities fraud as a crime that could carry a prison sentence of up to 25 years.
A new independent board will oversee the accounting industry, which largely had been monitored by members of its own profession. Following the indictment of Enron auditors Arthur Andersen, the accounting self-regulatory system has come under pressure to reform.
“This law says to accountants: ‘The high standards of your profession will be enforced without exception,” the president said. “The auditors will be audited, the accountants will be held to account.'”
“In the aftermath of September 11 we refused to allow fear to undermine our economy and we will not allow fraud to undermine it either,” Mr. Bush told a group of Democratic and Republican lawmakers and administration officials present at the signing ceremony.
Despite the president’s pledge to crack down on corporate fraud, a rally on Wall Street was humbled by a dismal new report on consumer confidence.
The Conference Board released its monthly Consumer Confidence Index Tuesday morning, showing a sharp fall for July.
The index, based on its monthly survey of 5,000 U.S. households, tumbled to 97.1 points, its lowest level since February. While “consumers’ expectations for the next six months have soured,” consumer confidence has not struck a historic low, the Conference Board said.