US President George W. Bush will host top prosecutors and regulators at the White House for the first meeting of his corporate fraud task force yesterday, seeking to reassure shaken investors and contain political fallout amid a string of business scandals.
"They will discuss with the president how they intend to proceed," said White House spokesman Ari Fleischer.
Bush established the task force Tuesday, and gave Deputy Attorney General Larry Thompson until July 19 to convene its first meeting. But in a surprise move, the president decided to hold the first session before week's end and do so at the White House, not the Justice Department, where the task force is essentially headquartered.
That ensures the president gets maximum credit for taking action. Photographers were permitted to capture and distribute images from the meeting, but reporters were barred.
The task force's members also include Treasury Secretary Paul O'Neill, FBI Director Robert Mueller, Securities and Exchange Commission Chairman Harvey Pitt and the heads of the Federal Energy Regulatory Commission, the Federal Communications Commission and the Commodity Futures Trading Commission.
Pitt has been under fire for his ties to the accounting industry in recent days, and absent from Washington, reportedly on vacation. It wasn't clear whether he was attending yesterday's meeting.
On Wall Street Tuesday, Bush described the new task force as a SWAT team for cracking down on accounting and other business wrongdoing. The executive order he signed creating it described it in more reserved terms: It is to ``provide direction'' on pursuing corporate fraud and ``make recommendations'' to Attorney General John Ashcroft and to Bush on how to enhance cooperation between agencies and improve corporate-crime policy.
Bush urged the business leaders to let their consciences be their guides in the board room, and he outlined proposals for tougher penalties for fraud.
The speech did little to boost stock markets, and lawmakers of both parties moved to outflank the president with more aggressive proposals. For example, the Senate this week endorsed stiffer prison terms than Bush called for, and an extension on the timeframe in which investors could sue corporations that defraud them.
Senator John McCain has called for Pitt's resignation and has proposed requiring companies to count executives' stock options as an expense against earnings. Otherwise, investors will continue to get misleading information on companies' true financial performance, he said.
Bush's task force meeting was designed to show an aggressive response on an issue where he could be vulnerable politically. Democrats charge Bush's own record as a businessman, and the tide of donations from corporate America that helped carry him to office in 2000, undercut his credibility as a reformer.
They have seized on his performance as a director of the Harken Energy Corp, where he flouted some of the very proposals he outlined Tuesday.
He called on corporations to stop loaning officers and directors money, though he borrowed some US$180,000 from Harken.
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