For the last two weeks, all the President's men -- or at least his economic team -- have been ratcheting up their concern over the fallout from corporate misconduct. On June 20, George W. Bush finally tackled the issue head-on.
In a closed-door meeting, the President hosted CEOs from the Business Roundtable at the White House. His message: Take a stronger role in restoring public confidence in wise corporate governance. "I want you fellows to lead," Bush told the execs, according to participants.
Bush has kept a fairly low profile on corporate malfeasance ever since the Enron/Arthur Andersen scandal began to unravel late last year. His last major pronouncement was a March speech laying out a 10-point plan for new regulations and stronger enforcement in the areas of accounting and financial disclosure.
New allegations of misconduct involving giants such as Global Crossing (GBLXQ), Tyco (TYC), and ImClone (IMCL), however, have left investors worried -- and the stock market in a funk. Meanwhile, Congress has seized the initiative on more aggressive reforms.
ANXIOUS TIMES. Enter Team Bush, which has concluded in recent days that it needs a more caring message. Over the past two weeks, White House Economic Adviser Lawrence Lindsey and Treasury Secretary Paul O'Neill have both lambasted the bad apples they feel have spoiled the business barrel.
In the Roundtable meeting, Bush spoke frankly with the executives, according to several participants. He said Americans had lost confidence in the honesty of corporate financial reports. Public anxiety about business wrongdoings, along with fear of future terrorist attacks, uncertainty about the Middle East, and concern about the economy, have suppressed any recovery in the stock market, he added.
"The President asked us to lead," said Pfizer Chief Executive Henry McKinnell. "When the President says he's concerned, believe me, we're concerned as well."
NOT FOR PUBLIC CONSUMPTION. It's no coincidence Bush picked the Roundtable to convey his message of concern. The group of 150 big-company CEOs last month issued a "white paper" calling for more-independent boards of directors and clearer financial reporting. It also has endorsed accounting-reform legislation approved June 18 by the Senate Banking Committee. That bill -- a measure crafted by Democrats -- is tougher than two GOP measures that Bush has embraced, a House-passed proposal, and new rules proposed June 20 by Securities & Exchange Commission Chairman Harvey Pitt.
Despite the strong remarks, Bush still isn't taking his concerns directly to the public. Cameras and reporters were barred from the Roundtable session, and the President hasn't spoken publicly on the many new revelations that have increased investors' anxiety since his March proposals, except for a few asides during public events. Even as he spoke to the CEOs, he didn't mention any of the specific companies that have become enmeshed in scandal.
The President's loyal business constituents say they'll do their best to change the public mood -- and corporate behavior. "That is our promise to the President," said International Paper CEO John Dillon, chairman of the Roundtable. "This is an issue we will forcefully deal with." Now, it's their mission to spread the message. By Richard Dunham and Mike McNamee in Washington