CEO scandals: these too shall pass; Jack Welch argues that the American public is not turning against business.

Jack Welch, former chief executive of General Electric and coauthor with Suzy Welch of a new book, Winning, says the climate of negativity toward CEOs will subside and a new generation of business leaders will emerge. Here are excerpts from a conversation originally conducted for The New York Times:

In your career, have you ever seen an environment in which CEOs are being turned out of office this rapidly and in these numbers?

I don't recall in my career seeing that. We clearly had some alarming situations that have required some actions. I think this, too, will pass.

Has the pendulum swung too far?

We're going to need a re-look at some of these things. We had to have Sarbanes-Oxley. The public needed to have confidence rebuilt, to know that the system was working. And they got it. I think it passed 97 to 0 in the Senate. But like any hastily done bill, there might be extremes in here. I think Sox 404 is a heck of a burden on small entrepreneurial companies about to go public. Maybe some modification is needed. I don't think it's a problem for big companies. These have well-established processes, internal auditors, audit committees and everything else.

These days, directors are personally and financially vulnerable if they make the wrong decision. Has that changed the dynamics of the boardroom?

I'm not in boardrooms, but I think it has to have. What we ask is, "What is the role of a director?" We're picking them for their judgment, their character, their ability to see around corners, to sense whether the strategy is right.

But they can't do that by looking at the books. They can only do that by walking the company. They have to get out and meet people at all levels, and get a feel for what it's like out there. Are they hearing the same things out there that they're hearing in the boardroom? Then they have to support the CEO. The company has to win. If they don't have confidence in the CEO, they've got to make the change.

When you go out on your book tour, how do you explain what a CEO does?

I don't explain it. What I talk about is, any time you are managing people, your job is not about you, it's about them. I was talking to students at Columbia and New York University, several hundred at each one. I tell these kids, "It starts out about you as you go as an individual into a company. But once you get a leadership job, it moves very quickly to being about them. You have to hire great people who can excite and make you look good--and make the company win. It quickly goes from "you" to "them." Your ability to excite them and go after challenges will determine how good you are. Because you can't do it by yourself.

Do you think that in today's environment American CEOs are too focused internally, playing defense, to be competitive globally?

No, I don't think that's true. I don't think the great CEOs in America today are in any way focused on defense. Their boards wouldn't let them. They're in a global competitive battle. That requires them and their boards to work in concert to win. You may see some who are concerned because their boards are not giving them the backup they need. But, in general, I would not make that sweeping observation.

Who are the best active CEOs today?

There are so many out there, but I know three great ones--Jim McNerney (of 3 M), Bob Nardelli (of Home Depot) and Jeff Immelt (of GE).

Since you trained them all at GE, don't you have a little conflict of interest in naming them?

Yes. I'm filled with conflict of interest on that. But you gotta admire the job Procter & Gamble has done in this environment. I like the way Bill Harrison and Jamie Dimon are integrating the BankOne deal. There are a lot of people doing a great job. I think being a CEO today in this terrific economy is more exciting than ever. You've got more playing fields around the world, whether it's Eastern Europe or India or China. You've got more opportunities and, yes, more threats, but that makes it more fun, more engaging.

Do you think American CEOs are responding well to the wave of competition from abroad?

Absolutely. I think there is a healthy understanding of what global competitiveness is all about. They're using it to their advantage wherever they can. They recognize that they have to have win-win situations in these countries. It isn't about taking all the chips off the table for themselves.

How well is the economy handling this competition?

When I became CEO of GE, the prime rate was somewhere north of 20 percent. The unemployment rate was double digit. Inflation was double digit and we had nine straight quarters of negative growth in 1979 and 1980. The Japanese were going to take over the world. Today, with 5 percent unemployment, inflation in the 3 to 4 percent range, the prime rate at 4 percent, and growth at 4 percent for eight or nine quarters in a row, I don't have much sympathy for hand-wringing. This economy is in very good shape and we're doing very well.

I wish I could take everyone in America to a breakfast I attended in Atlanta. They had the 50 fastest growing companies in Atlanta. I've never heard of any one of them. They've done this incredible entrepreneurial job. The winner had grown from $7 million in sales to $90 million in three years. They are in the airline de-icing and cleaning planes business (see page 14). They went into an industry that's having some difficulty and they found a successful niche to grow like heck. It was so exciting.

And when I was at NYU, I asked the students how many had jobs. They all raised their hands. They're all excited. Now they're concerned about ethies. But they also understand that business is the engine of this society. Government doesn't create any revenues. They tax employees and employers. They do wonderful things. They protect us in wars. They educate us. A judicial system safeguards us. But let's not forget the engine is business. I preach that at every school I go to. These kids want to make sure that companies are good and I'm telling them, they are.

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So the image in the headlines of CEOs being thrown in jail or being forced to resign is not reflective of what's really happening in business?

There have been some high-profile disasters, okay? But millions of people get up every day to go to work. And all these kids are thrilled to go to work. They can hardly wait to get their hands in it. Yes, they're concerned, but they see the glass as half full. I don't want them to feel business is bad. Business is great.

Do you feel the country right now believes that business is bad?

Only when they don't think about it. They all think they go to a company that's good. But they're worried about what they read. They don't see it or feel it in their own companies. But let's not gloss over the fact that we've had some serious transgressions here. People have a right to question and ask. But we can never forget what drives this great democracy.