[Congressional Record Volume 148, Number 105 (Monday, July 29, 2002)]
[Extensions of Remarks]
[Page E1466]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               CLEANING UP CORPORATE ACCOUNTING PRACTICES

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                       HON. JANICE D. SCHAKOWSKY

                              of illinois

                    in the house of representatives

                         Friday, July 26, 2002

  Ms. SCHAKOWSKY. Mr. Speaker, the House of Representatives yesterday 
finally passed tough corporate and auditor accountability legislation. 
After voting unanimously to oppose almost the same bill in April, House 
Republicans finally joined Democrats in taking the first step to 
restore investor confidence by cleaning up corporate accounting 
practices. I want to emphasize that is only a modest first step if we 
are to restore investor confidence and protect workers and pension 
holders from corporate greed.
  We could have passed strong reforms months ago, but now we are 
playing catch up. Our work will not be finished until there is pension 
security, stock options reforms, and government corporate watchdogs who 
are not tied to Enron and other corporate thieves. I strongly encourage 
the President to fire Harvey Pitt, to hire regulators who are 
independent from the industries they regulate, and to aggressively 
pursue those reforms.
  I am pleased that this legislation will stop loans to corporate 
insiders, extend the statute of limitations for financial fraud from 
three to five years, force corporate insiders to disclosure within two 
days, and strengthen whistleblower protections for corporate employees.
  However, I am disappointed that we have not acted ourselves or 
directed the Financial Accounting Standards Board to account for stock 
options as an expense. Stock options packages have been used to deceive 
investors and workers as to the true financial condition of a 
corporation. At a recent Berkshire Hathaway annual meeting, Warren 
Buffet stated, ``If options aren't a form of compensation, what are 
they? If compensation isn't an expense, what is it? And, if expenses 
shouldn't go into the calculation of earnings, where in the world 
should they go?'' We need to create rules that will restore integrity 
to our markets.
  I am also disappointed that we are not doing more to make sure that 
workers, pension holders, and investors are compensated by corporate 
wrongdoers and their accomplices. They suffered great losses; and 
through this legislation, they are not totally compensated for those 
injuries. Accountants, lawyers, and banks that aid and abet corporate 
fraud are not held liable at all for damages under current law. In 
order to restore integrity to our financial markets, all parties will 
need to be held responsible for their actions. Clearly, our work is far 
from over.

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