Key Lawmakers Agree To Historic Corporate Reform Bill
Wednesday, July 24, 2002
Consumers Union says agreement promises to help restore accountability, trust
WASHINGTON, DC – Key members of Congress today announced that they had reached an agreement on a major overhaul of accounting and corporate-governance laws.
Consumers Union, the nonprofit publisher of Consumer Reports magazine, said the agreement reached today is critical first step in restoring corporate accountability and public trust needed to begin a turnaround in the market.
Lack of meaningful internal checks and lax oversight in an era of deregulation led to a stream of corporate scandals. The scandals eroded investor confidence, angered the general public, and rocked the stock market. Today’s agreement demonstrates the ability of Congress to identify problems that the marketplace cannot correct by itself. With this effort Congress has recognized its appropriate role – to act where there is a need for greater accountability and to provide discrete mechanisms that establish a system of checks and balances.
This legislative effort is a model for how Congress should step in to restore balance in the marketplace whenever necessary.
There is still plenty of work left to be done. Pension reforms, stock options, help for employees and investors whose savings were wiped out by scandals like Enron and WorldCom recoup their losses. We support legislation in California to deter accounting fraud by imposing a cooling-off period on individual accountants handling audits of public companies, as well as a California anti-shredding law. But for all of the work ahead of us, this agreement is still a major step forward.
Six weeks ago, the prospects for this bill were not good. It appeared that the accounting industry would once again succeed in defeating real reforms. But this bill that was once thought to be all but dead is now all but signed into law. We applaud Senator Sarbanes, Senator Christopher Dodd, D-Ct., Senator John Corzine, D-N.J., and Rep. John LaFalce, D-N.Y., for their leadership on this difficult issue. These lawmakers and their staffs worked long and hard to advance this bill, and consumers will be the great beneficiaries.
David Butler (202) 462-6262
Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition and other consumer concerns. Since 1936, our mission has been to test products, inform the public and protect consumers