The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“ACCOUNTING REFORM AND INVESTOR PROTECTION WILL BE THE FIRST ORDER OF BUSINESS WHEN WE RETURN” mentioning the U.S. Dept. of Justice was published in the Senate section on pages S6297-S6298 on June 28, 2002.
The publication is reproduced in full below:
ACCOUNTING REFORM AND INVESTOR PROTECTION WILL BE THE FIRST ORDER OF
BUSINESS WHEN WE RETURN
Mr. DASCHLE. Madam President, our form of government rests on two pillars. One is democracy. The other is free enterprise. We are the strongest, most successful nation in the world because we have maintained the strength of both of those pillars.
We are the most durable democracy in the world because our system is constantly refreshed by new leaders and new ideas. If leaders fail, they can be voted out of office. If ideas fail, they can be either discarded or improved.
The strength of the system rests on the fact that--while not perfect--our Government is open and accountable.
We have the strongest economy in the world, because our commitment to free enterprise is strengthened by a system of open markets. Those markets--fed by free-flowing, reliable financial information--channel investment into new ideas and new enterprises. Working at its best, our free enterprise system has generated durable economic growth, wealth, and opportunity that are the envy of the world.
The corruption of one of these pillars threatens the other. The weakening of either threatens our Nation.
This week's news from MCI WorldCom was the latest in a series of disclosures that have shaken confidence in American business.
Recently, we have seen Enron collapse under the weight of inflated earnings and hidden debt. We have seen Halliburton face charges of improperly recording revenue. We've seen Tyco accused of falsifying merger information, and its CEO indicted. Arthur Andersen has been convicted of obstructing justice.
The list goes on: CMS Energy, Computer Associates, Dynegy, Global Crossing, ImClone, Kmart, Lucent, MicroStrategy, Network Associates, PNC Financial Services, Qwest, Reliant Resources, and Xerox are all facing serious questions about their business practices.
This string of disclosures threatens our economy to its core. They undermine investor confidence, scare off foreign investment, and slow an already shaky recovery.
And the impact is much more than some economic abstraction. Thousands of honest, hardworking people have lost their jobs. Millions more have seen their savings, their nest eggs, and their retirements gutted.
When corporate fraud leads to corporate failure, people get hurt.
I am not arguing that the corruption we have seen is systemic. America has some of the world's most innovative executives, people of tremendous energy, skill, and integrity.
They are the vast majority of corporate executives, and they should be the most outraged about the recent news. In my own discussions with corporate leaders, that is actually the case. They are the most outraged. They resent the notion that the corruption is systemic, that the deception is pervasive, and that ``everyone is doing it.''
I know--and most Americans know--that everyone is not doing it.
But the growing list of corporations under question makes clear that we aren't just talking about one or two isolated cases, or rogue executives.
The problem, instead, is a ``climate''--a deregulatory, permissive atmosphere that has relied too much on corporate America to police itself. It is as if the line between right and wrong, legal and illegal, acceptable and unacceptable was so little enforced that it became blurred. Bringing it back into focus--as Enron's collapse did--
revealed more than a few businesses standing on the wrong side.
The evidence rolling in is now unambiguous. Self-policing is no replacement for a vigilant cop on the beat. It is time to reform and strengthen the system.
Unfortunately, the desire for reform is not to be found in the approaches taken by the White House, the House, and the SEC.
This game of corporate dominoes we are watching is a wake up call. It is time to abandon this laissez-faire attitude and take action.
For starters, we need to made sure that the laws currently on the books are enforced. The SEC and Justice Department need to do more to aggressively and consistently investigate and prosecute cases of corporate fraud.
But enforcement alone isn't enough. We are now seeing cases where the law itself doesn't stand in the way of these egregious actions.
It is time for us to reform our system of accounting and do more to protect investors.
That is exactly what the Sarbanes bill does. And that is why it will be our first order of business when we return from recess. The Sarbanes bill makes six key improvements over our current system.
First, it creates an independent audit oversight board with the authority to set standards, conduct investigations, and impose punishment if those standards aren't met.
Second, it restricts the nonaudit services that an accounting firm can provide to public companies it audits. In other words, it keeps auditors out of the business of being a company's consultant or tax advisors in addition to being its auditor--the roles that can lead to conflicts of interest.
Third, it holds CEOs and CFOs responsible for the accuracy of operating and financial reports. If it turns out that an earnings report is deliberately misstated, those executives would forfeit profits and bonuses earned after that information was released.
Fourth, if corporate insiders sell stock, those sales must be reported to the SEC within 2 days.
Fifth, it would make sure that investment banking firms that also provide investment analysis don't mix those two functions. It also protects analysts from retaliation if they make unfavorable stock recommendations.
Sixth and finally, this bill includes expanded resources for the SEC. This will help them become more thorough investigators and enforcers. I have called the SEC a toothless tiger. This bill gives the agency some teeth.
In a message to Congress calling for the creation of the Securities and Exchange Commission, President Roosevelt said he sought to ``give impetus to honest dealing in securities and thereby bring back public confidence.''
It is time for us to again, ``give impetus to honest dealing, and bring back public confidence.''
That is what this bill does. It strengthens both our democracy and our system of free enterprise.
Senator Sarbanes has done a masterful job in moving it through committee with broad bipartisan support.
For the sake of America's economy, America's workers, and the two pillars on which our nation's greatness rests, I look forward to debating it when we return.
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