House, Senate Leaders Move on an Accounting Bill

Under pressure from the White House and the public to act on corporate reform, House and Senate leaders moved Wednesday to begin talks on the final version of legislation to crack down on accounting abuses--and set a goal of finishing work before Congress adjourns for its August recess.

House Republican leaders have balked at speeding the process by simply accepting the more stringent bill approved unanimously earlier this week by the Senate. Instead, they insist on formal negotiations to reconcile differences between the Senate bill and a measure the House passed in April.

Faced with charges of foot dragging, House GOP leaders on Wednesday named negotiators to work with Senate counterparts and said they hoped the House would have a final bill to approve before the end of next week. Senate approval presumably would follow within days.

House Financial Services Committee Chairman Michael G. Oxley (R-Ohio), a vocal critic of the Senate bill, had wanted a more leisurely timetable for negotiations. But Wednesday, he acknowledged that political pressures made that unrealistic.

“In the best of worlds, it might be nice to have a cooling-off period,” Oxley said. “But we’re not in that world. You play the cards you’re dealt.”

The schedule laid out by House leaders, if followed, would be a setback for business lobbyists. “It makes my job a lot harder,” said Bruce Josten, executive vice president of the U.S. Chamber of Commerce, who has been lobbying against key provisions in the Senate bill.

Lobbyists such as Josten want to postpone final action on the bill until after the August recess. That would give them more time to fight provisions they oppose and, perhaps, slow the momentum for legislation that has been fueled by public anxiety about stock market instability.

Democrats remained skeptical that GOP negotiators would be willing to compromise enough to finish talks by the end of next week. Indeed, the House was not in a compromising mood Wednesday when, after naming conferees, they voted, 218 to 207, against a resolution endorsing the Senate bill’s provisions setting stricter penalties for corporate misconduct.

“How serious are they in terms of negotiating?” said Jesse Jacobs, spokesman for Senate Banking Committee Chairman Paul S. Sarbanes (D-Md.). “It’s a hope that we get it done by next week. It is also a stretch that we get it done by next week, but we’re prepared to do that.”

Republicans, meanwhile, are suspicious that Democrats want to drag out negotiations to keep the issue alive. Citing a Democratic leader’s prediction that it would take two months to reach a compromise, White House spokesman Ari Fleischer attacked what he termed a “Democrat plan to stall this bill.” He called that “unacceptable and not in the national interest.”

At issue is legislation many lawmakers say is needed to help restore investor and consumer confidence in the business community that has been rocked by a cascade of scandals in recent months.

Bush has urged Congress to resolve its differences and send him a bill to sign before lawmakers go home for a month-long summer recess. That recess begins at the end of next week for the House, and a week later for the Senate.

The Senate bill would create an independent board to oversee the accounting industry, limit the ability of accounting firms to consult for companies they audit, ban corporate loans to company insiders and crack down on other business practices that contributed to the scandals. It also would add new penalties for fraud and make it easier to prosecute dishonest executives.

The House bill also would create an accounting watchdog panel, but its makeup and powers would differ from the Senate proposal. The House bill did not include the stricter penalties for corporate crime. However, the House on Tuesday passed a separate bill authorizing increased penalties--going further than the Senate in some respects and not as far in others.

Oxley struck a more conciliatory tone toward the Senate measure Wednesday, saying, “The bills have many similarities, so we begin a conference based on quite a bit of common ground.”

Republicans defended their decision to call for a formal conference committee on the bill rather than simply rubber-stamp the Senate bill.

“We can take an OK bill and make it really good,” said Rep. Richard H. Baker (R-La.).

One major point in dispute is the accounting oversight board. Under the Senate plan, it would have full authority to set auditing and ethics rules and to investigate and discipline auditors. The five-member board would be named by the SEC, with two members, but no more, having accounting backgrounds.

The House bill delegates much of the details of the new board’s authority to the SEC, an agency that critics say has not acted aggressively enough to root out corporate corruption. House Republicans also have reservations about Senate provisions giving the board subpoena power, and favor a panel with four of the five members having an accounting background.

In other issues facing the conference, Oxley and Baker said they would insist on House provisions to require firms to disclose information affecting their financial health more rapidly than they do now.

Baker said he would also insist on a proposal to establish a mechanism for returning funds to investors who have lost money as a result of corporate malfeasance.

Conference committee members appointed by the House include five Californians: Reps. Christopher Cox (R-Newport Beach), William M. Thomas (R-Bakersfield), Ed Royce (R-Fullerton), George Miller (D-Martinez) and Maxine Waters (D-Los Angeles).