Chief executives widely praised US President George W. Bush's speech Tuesday, saying it would help restore confidence in American business. But many Wall Streeters and those who run large pension funds that own billions of dollars in stocks expressed disappointment that Bush did not offer more specific proposals to clean up corporate wrongdoing.
The two points of view represent competing visions of the current scandal over corporate behavior -- executives who feel their credibility is at stake and investors angered by a cascading series of financial losses and a string of accounting failures.
While both sides praised Bush's focus on the need for integrity and ethical behavior among chief executives, opinions diverged on most other points. Institutional investors felt more sweeping changes in boardroom rules and accounting oversight were needed while others, mainly business leaders, said they opposed any move toward greater regulation.
"I was hoping for more commitment to regulatory reform and to corporate governance reform in light of what happened," said Felix Rohatyn, the long-time Wall Street financier. "There are still too many holes in our regulatory dikes. They must be fixed, otherwise a very important national asset, namely our financial markets, will be badly damaged."
Rohatyn has advocated, among other changes, putting institutional investors on corporate boards and reporting stock options granted to top executives on income statements, items that were not on the White House's agenda.
By contrast, chief executives were fulsome in their praise.
"We needed this speech because people are losing confidence," said George David, chief executive of United Technologies Corp, a diversified manufacturer in Hartford, Connecticut. "Some bad things happen and people say the system is broken. It's not. A huge percentage of corporate America is honest and his speech reinforced that."
Perhaps most disappointed were institutional investors and corporate governance advocates who were hoping Bush might endorse some proposals they have long advocated. These include greater financial oversight and requiring that stock options be treated as corporate expenses. They were especially concerned that Bush declined to endorse proposals for overhauling the accounting industry contained in a Senate bill introduced by Senator Paul Sarbanes. Instead, the president praised a House version of the bill, which they contend is too weak.
"My concern is whether the speech was just more political rhetoric or whether it was truly a call for action," said James Burton, chief executive of the California Public Employees Retirement System, the nation's largest public pension fund, with US$150 billion in assets. "We think it is time for Congress to act. It wasn't so much what the president said, but more of what he didn't say."
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