George Bush on Corporate Fraud

Corporate Fraud: At the height of the recession, scandals began to surface, and whistle-blowers became more prominent. CEOs of such companies as Enron, Adelphia Communications, and WorldCom have been accused of accounting fraud. Otherwise known as "cooking the books," this allowed companies to profit further and financially drain shareholders, bankrupting many and resulting in a loss of consumer confidence. In a time of financial stress, the next president would need to figure out ways to curb corporate fraud.

George W. Bush:

Description of candidate's position: In 2002, Bush put together a Corporate Fraud Task Force, designed to coordinate federal authorities to result in more crackdowns and convictions of fraudulent business practices. Its purpose is to "restore consumer confidence, provide fair and accurate information to the investing public, reward shareholder and employee trust, and protect jobs and savings." From the Bush re-election website:

Quotation from the candidate: "I've come to the financial capital of the world to speak of a serious challenge to our financial markets, and to the confidence on which they rest. The misdeeds now being uncovered in some quarters of corporate America are threatening the financial well-being of many workers and many investors. At this moment, America's greatest economic need is higher ethical standards -- standards enforced by strict laws and upheld by responsible business leaders."

Assessment of the proposal:

Positive: The Economic Policy Institute, a non-partisan group, wrote an article in 2002 commenting that legislative action needed to be taken in order for corporate fraud to stop. In this way, the Institute argues, "future losses like those experienced by workers at WorldCom, Enron, and Global Crossing can be prevented." EPI

Negative: The American Enterprise Institute, in an article jointly sponsored by the Brookings Institution, agrees that something needs to be done about corporate fraud but advocates help from the inside, allowing whistle-blowers protection, instead of putting more time and money into finding corporate fraud, which they argue doesn't work better with more people working on it. AEI-Brookings

Comparison: Kerry seems to agree with the Task Force that Bush has set up but argues that the administration is hypocritical and counter-productive, pointing to Halliburton as one of the biggest examples of fraudulent behavior and saying that tax breaks for companies that outsource is the wrong message to send.

Link to John F. Kerry's issue brief.