Ed Bryant, July 12, 2002

Like anything else in our society, for business to succeed, honesty and integrity are essential. However, some corporate executives think that they are above the law, and that business ethics are dissimilar from everyday ethics. They are wrong, and the House has acted to reform accounting practices and ensure that your pension will be there when you retire.

The foundation of our free market economy is the rule of law. The laws and regulations currently in place serve to give us all confidence in the economy. Corporate CEOs and accountants must obey the law, and if they break the law they must be prosecuted and sent to jail. Corporate CEOs who steal the retirement nest eggs of millions of Americans are no better than common criminals stealing purses, and we will not tolerate their abuse of our laws.

Recently, President George W. Bush outlined his plan for corporate responsibility. The President’s plan would create a corporate fraud task force, increase jail time for lawbreakers, increase SEC resources for greater enforcement, and provide investors better advice and information. It is clear that the laws and regulations we currently have in place are not working in protecting millions of hard working Americans, and that we need to close the loopholes that are currently being exploited by greedy corporate CEOs.

The House has already worked to implement many of the President’s proposals. In April the House passed both the Pension Security Act, and the Corporate and Auditing Accountability, Responsibility and Transparency Act (CARTA). On July 10th, the Subcommittee on Commerce, Trade and Consumer Protection, on which I sit, approved the Financial Accounting Standards Board (FASB) Act, which gives formal authority to the private accounting rule-making body.

The Pension Security Act allows all workers equal opportunity to ensure their families’ futures by giving them the freedom to diversify their retirement plans. It also creates parity between senior corporate executives and rank-and-file workers. Our legislation clarifies that employers are responsible for their workers’ savings during blackout periods and gives those workers access to quality investment advice and better information about their pensions.

CARTA ends the abuses of the accounting system that have been made famous by Enron and Global Crossing, and will help restore confidence in the accounting profession. CARTA increases corporate disclosure and responsibility by requiring companies to disclose information about their financial health more quickly, and in plain English. It also protects employees’ 401(k) plans by prohibiting corporate insiders from buying or selling company stock during blackout periods, when regular employees are unable to buy securities. The SEC’s budget is increased to allow it to perform its new tasks and responsibilities. CARTA also will reduce analyst conflicts of interest, so that investors will know that secondary financial interests do not taint the advice they are receiving.

FASB sets accounting standards for corporate financial reports, and our legislation gives federal recognition to their standards, and directs FASB to require accountants to apply its standards using the fundamental principles of transparency and understandability. FASB would be required to make standards regarding off-balance sheet accounting, which has been severely abused by corporations such as Enron. Our legislation is a complement to CARTA and will go a long way in preventing the abuse of accounting standards.

Together with President Bush, the House has acted to strengthen accounting rules and protect employee pensions, which will help restore investor confidence. Millions of Americans rely on their IRAs and 401(k)s for retirement, education and health care expenses, and a healthy stock market will lead to growth for these plans. Corporate executives and others have been put on notice that we will not tolerate their abuses of the law, and if they break the law and defraud hard working Americans, they will serve time in jail.

Congressman Ed Bryant represents Tennessee's Seventh Congressional District.