House approves legislation to tighten accounting oversight

WASHINGTON -- The House on Wednesday adopted Enron-inspired legislation to tighten oversight of the accounting industry and toughen corporate disclosure rules.

The vote was 334-90, with some Democrats accusing House Republican leaders of bowing to financial interests by passing a weak bill. Houston-based Enron, which entered the biggest bankruptcy in U.S. history in December, was one of President Bush's largest corporate donors. Still, 119 Democrats joined the Republicans to vote for the measure; 87 Democrats opposed it.

In House debate, the bill's GOP authors said it would bolster investor confidence -- shaken by Enron's collapse and by accounting failures at other big companies -- without creating needless red tape for business.

The legislation would establish a new regulatory body to oversee the accounting industry and discipline auditors, replacing the current system in which the industry largely polices itself.

"We have taken action. We've stood up to Wall Street to protect working families," said Rep. Richard Baker, R-La.

But Rep. John LaFalce of New York, senior Democrat on the House Financial Services Committee, told the Republicans they would get "a pat on the back" from corporate America and Wall Street.

He and some other Democrats, consumer groups and the AFL-CIO said the bill lacked teeth.

Criticized as weak

Among other things, they wanted the new oversight body to have its duties and powers spelled out, warning that the body created by the bill could be dominated by the accounting profession.

"The Republican leadership, once again, is selling out to special interests. It is refusing to hold executives accountable for their actions," House Minority Leader Dick Gephardt, D-Mo., said at a news conference.

Opponents warned that the legislation relies on Wall Street's ability to police itself and companies' voluntary efforts to hold executives accountable rather than clear rules. The House rebuffed, in a 219-202 vote, LaFalce's Democratic alternative to the bill that would have required company executives to personally certify the accuracy of corporate financial statements.

It also would have enabled the Securities and Exchange Commission to strip stock bonuses from executives who falsify statements and would have mandated that companies change their accounting firms every few years.