Washington Mindful of midterm elections just three months away, Congress sent legislation to President Bush on Thursday creating stiff penalties for corporate fraud and document shredding in hopes of easing economic jitters and restoring confidence in the markets.
In overwhelming votes, the House and then the Senate approved the sweeping compromise legislation, which rivals revisions to federal laws responding to the stock market crash of 1929. Bush said he would sign the bill.
"Today's passage by Congress of corporate accounting reforms is a victory for America's shareholders and employees," Bush said. "House and Senate passage of this legislation demonstrates what can happen when leaders work together to solve problems."
Sen. Mike Enzi, R-Wyo., a former accountant, called the legislation "earthshaking," adding that it was approved with "tremendous speed."
In the compromise measure, House Republicans accepted most of the stricter parts of a bill that the Democratic-controlled Senate passed unanimously last week.
The House approved the measure 423-3 and the Senate 99-0. Even longtime opponent Sen. Phil Gramm, R-Tex., who had warned that the bill "does more harm than it should" and declared Wednesday he would vote against it, switched to cast a "yes" vote.
"Today's message from Congress to CEOs and corporate boardrooms is clear," said House Speaker Dennis Hastert, R-Ill. "If you steal, cheat or commit some other white-collar crime, you'll face the same consequences as law-breaking street thugs by spending time behind bars."
Moving on the same front, the Senate later Thursday confirmed four Bush nominees two Republicans and two Democrats to fill vacancies on the five-member Securities and Exchange Commission. The strained agency is investigating accounting irregularities at dozens of big companies.
The new legislation gives the SEC an additional $300 million or so to hire some 200 auditors and investigators.
Lawmakers in both parties were seeking to rebuild Americans' shattered confidence in business and the market, mindful that they must face voters in November.
The legislation creates criminal penalties and prison terms for company fraud and document shredding, and establishes an independent, private-sector board with subpoena power to oversee the accounting industry.
The measure imposes restrictions on accounting firms doing consulting for corporations whose books they audit. It prohibits personal loans from companies to their top officials and directors. And it orders new rules for financial analysts designed to prevent conflicts of interest.
In addition, the bill extends the time in which defrauded investors may bring lawsuits against companies a hard pill to swallow for Republican lawmakers who acted several years ago to stem what they maintained was a spate of frivolous shareholder suits.