Audit the Auditors, Democrats Say

By Susan Jones | July 7, 2008 | 8:28 PM EDT

( - Even before President Bush addressed the issue of corporate accountability on Tuesday, Senate Democrats tried to take the wind out of his sails by telling the president what he should say.

Unless Bush supports a Democrat-sponsored "corporate responsibility bill," Democrats said, the reforms he outlines Tuesday won't be good enough to restore investor's trust in the financial markets.

At a press conference that took place half an hour before Bush was to speak in New York's financial district, Sen. Tom Daschle (D-S.D.) said that to "truly take on corporate fraud," the government must do two things: establish a strong, independent oversight board to "audit the auditors"; and impose real restrictions on auditors' conflict of interest.

"If you don't support those, you don't support real reform," Daschle said.

Then he plugged the Democrats' remedy.

"We have a bill that protects workers, protects shareholders, and protects pensioners," Daschle said. "I believe we have an opportunity to pass these measures now. All we need is one thing. We need the president's support. Without support for Sen.[Paul] Sarbanes' bipartisan corporate responsibility bill, the president's words today will ring hollow." (Sarbanes is a Maryland Democrat.)

Then it was Rep. Dick Gephardt's turn at the podium: "Words alone will only raise the expectations of reform and dash the hopes of millions of people who are seeking real, effective action," the House Minority Leader warned.

"Today we urge the president to provide leadership driven by deeds and defined by results," the Missouri Democrat said. Gephardt also urged Bush to "go beyond rhetoric and actually [pass] strong legislation to protect Americans."

On Monday, President Bush said Sarbane's bill had merit, although he doesn't agree with all of its provisions.

Among other things, Sarbanes' bill would impose new standards on the accounting industry, including an "oversight" board to "audit the auditors," as the Democrats keep saying.

It would also require top executives to attest to the accuracy of their company's financial statements.

Critics, including Sen. Phil Gramm (R-Tex.), said the bill will give the oversight board "massive, unchecked powers" to regulate the private sector.