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Response muted to Bush's call to end corruption.

US stocks lost ground in early trading yesterday after President Bush failed to calm down a scandal-weary Wall Street despite proposing stiff penalties for companies and executives who cook the books.

He promised, in a speech on Wall Street, that his administration would 'end the days of cooking the books, shading the truth and breaking the law'.

Confronting a wave of corporate wrongdoing that has undermined investor confidence and threatened political damage to the White House, Mr Bush said: 'We will use the full weight of the law to expose and root out corruption.'

The president called on the US Sentencing Commission to recommend longer prison terms for corporate executives guilty of fraud and announced a new task force for the pursuit and prosecution of corporate criminal activity. Mr Bush said the task force would be a 'financial crimes SWAT team, overseeing the investigation of corporate abusers and bringing them to account'.

Mr Bush said the mushrooming corporate scandals threatened to undermine economic recovery and damage the financial wellbeing of workers.

'The business pages of American newspapers should not read like a scandal sheet,' he said.

'I am calling for a new ethic of personal responsibility in the business community - an ethic that will increase investor confidence, make employees proud of their companies and regain the trust of the American people.

'More scandals are hiding in corporate America. We must find and expose them now so we can begin rebuilding the confidence of our people and the momentum of our markets.'

Mr Bush's clean-up plan also includes giving the Securities and Exchange Commission added powers to freeze improper payments to corporate executives while a company is under investigation. It would also persuade publicly traded companies to prevent corporate officers from receiving loans from their own companies and require that a majority of a company's directors - and all members of the company's audit, nominating and compensation committees - have no material relationship with the company.

'I'm an avid backer of the free enterprise system, but I also understand that requires trust,' added Mr Bush.

The president was bombarded with questions about his record as a director at Harken Energy Corporation in the early 1990s. The SEC forced the company to amend its books to reflect millions of dollars in losses that had been hidden by the sale of a subsidiary to a group of insiders.

Mr Bush said: 'There was an honest difference of opinion as to how to account for a complicated transaction.'

The response from Wall Street professionals to Mr Bush's speech was muted. Said a Fahnestock & Co analyst: 'It appears for now we still are experiencing a scandal a day which is keeping confidence at bay.'
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Jul 10, 2002
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