Enthusiasm Ebbs for Tough Reform in Wake of Enron
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For now, lawmakers say, they have trumped the arguments of such people as Alan Greenspan, the Federal Reserve chairman, and the multibillionaire investor Warren E. Buffett that the current treatment of options contributed to corporate overreaching in the 1990's.
The Bush administration has not been a visible force in the legislative battles, relying instead on likeminded allies — notably Senator Gramm — to bottle up the most ambitious legislation. He has met repeatedly with corporate lobbyists and urged them to press sympathetic Democrats or those facing tight races, like Thomas R. Carper of Delaware, Evan Bayh of Indiana and Zell Miller of Georgia, to block legislation from reaching the Senate floor.
Democrats say that effort appears to have failed and that Senator Paul S. Sarbanes, Democrat of Maryland, appears to have the support to get a bill approved by the banking committee. It would sharply curtail the consulting work performed by accounting firms, create a relatively independent oversight board for the accounting profession, require large corporations to rotate their auditors every five years, and impose tighter conflict of interest restrictions on stock analysts than the measure that was passed by the House.
Mr. Gramm has been working closely with the administration on an alternative measure that does not tighten conflict of interest regulations for analysts or auditing firms. His wife's Enron ties seem to have produced no political pressure on Mr. Gramm — who has announced his intention to retire from the Senate after this year — to shy from the debate.
The post-Enron proposals prompted scores of industry associations and hundreds of corporations to retain lobbyists and use their own employees to try to weaken or kill the measures. They include the American Institute of Certified Public Accountants, which is dominated by the largest firms. Hundreds of companies, including Oracle and Intel, have fought against changing the treatment of stock options. And many of the largest Wall Street firms have lobbied against changes in the laws governing stock analysts.
The drift in Congress largely reflects the power of the accounting profession. Accounting firms ranked as three of President Bush's top eight campaign donors in 2000, and over all, the industry made $14.7 million in campaign donations to both Democrats and Republicans during the last election cycle, according to the Center for Responsive Politics. The profession has influential members in many congressional districts and has been known to use lawmakers' own accountants to lobby them.
Pension legislation may stand a better chance in Congress, although its prospects remain cloudy.
The chairman of the Senate Finance Committee, Max Baucus of Montana, is crafting an alternative to a bill by Senator Edward M. Kennedy, Democrat of Massachusetts, that drew strong opposition from business lobbyists and Republicans.
On some points, Mr. Baucus's bill is likely to contain provisions similar to those in the House bill, like permitting workers to sell company stock awarded as a 401(k) match three years after they receive it. Senate aides say the bill may also place limits on certain forms of executive compensation. Mr. Daschle is warming to the provisions that are expected to form the Baucus proposal, Senate aides say.
But they say the Baucus plan is unlikely to include the Kennedy proposal's provision prohibiting most companies from both offering their stock as a 401(k) investment option and using it to match employee contributions. This was designed to keep employees from putting too much retirement money in their own stock, as happened at Enron.
One major issue that remains unresolved is how to give employees better access to investment advice. Investment management companies have been lobbying to permit firms that administer retirement plans to offer advice to participants. Among other things, they would be permitted to recommend investments for which they could receive a fee.
Senate aides say the Baucus proposal may instead contain a provision encouraging employers to hire independent firms to provide advice. |
