THE REPUBLICANS TOOK BACK THE SENATE.
WHITE SULPHUR SPRINGS, W. Va. (Reuters) - Top U.S. executives are disgusted by the excesses of some peers and satisfied with actions taken so far to clean up corporate America, but there is concern that lawmakers may go too far.
"Usually in this country when we react to scandals, the pendulum does swing too far and we later regret it," Franklin Raines, Chief Executive of Fannie Mae, told Reuters. "Its not unusual when Congress is responding to an outraged public that they might go too far in one way or another."
Corporate scandals like the Enron Corp. and WorldCom debacles have shaken up investors and have led to criminal indictments of some formerly high-flying executives. It has also tainted the role of chief executive officer.
"It is appalling what some CEOs did in abusing the trust that they had," Raines said. "I am mortified by it as a CEO and chagrined that I'm painted with that same brush."
Corporate governance was one of the hottest topics at a meeting of high-powered CEOs -- known as the Business Council -- at the posh Greenbrier Resort here this week. Past attendees who were notably absent this year included Kenneth Lay, disgraced Enron CEO, and former Tyco boss Dennis Kozlowski, who has been indicted for corruption.
The Sarbanes-Oxley Act, passed this summer in response to the flood of scandals, represented the biggest overhaul of U.S. corporate and accounting regulation since the 1930s.
CEOs and chief financial officers now must sign off on their financial results, making them personally responsible. New York Stock Exchange rules also have been developed to make corporate boards more independent.
"The broad governance issues that were addressed by Sarbanes-Oxley were needed and will be good," Ken Lewis, CEO of Bank of America Corp., said. "We (as CEOs) should all put our heads down, get back to our businesses, benefit our shareholders and lead by example."
WALL STREET EXCESSES
Wall Street was well represented at the meeting, with J.P. Morgan Chase & Co. CEO Bill Harrison, Citigroup Inc.'s Sandy Weill and Goldman Sachs Group Inc. chief Henry Paulson in attendance.
All three executives have been beleaguered by federal and regulatory investigations into business practices ranging from questionable dealmaking to stock offering allocations and the objectivity of stock research.
Weill and Paulson were unavailable for comment, but Harrison, who is vice chairman of the Business Council, addressed some issues at a press conference on Wednesday.
"We were all part of the excesses of the '90s," he said. "We are all having to respond to it."
Critics charge bankers pressure analysts to issue overly bullish research to help win underwriting and advisory deals. The separation of stock research from investment banking and other dramatic changes on Wall Street are an increasingly likely possibility these days.
"I just hope we don't go too far ... and damage the fabric of what has made Wall Street great and what has made America great," Harrison said.
COSTS
Many CEOs declined to talk to reporters during the conference, perhaps a signal that they have been stung by the negative publicity surrounding corporate executives.
"When the man on the street thinks we're all crooks, that hurts," said Sprint Corp. CEO Bill Esrey. "If you spent your time trying to work for your company, build up your company, believe you're doing the right thing, it's a very difficult environment."
With regulation comes costs as well. While 95 percent of respondents to a poll of 75 CEOs said the new rules did not make them change their long-term plans, the costs of having to make sure things are above board can be add up.
"Signing off on documents without making any changes to them ... is costing my shareholders," said Scott McNealy, CEO of Sun Microsystems Inc. "Making it difficult for people to serve on boards will lower the quality of governance in companies massively, that's going to cost my shareholders."
(Additional reporting by Jeremy Pelofsky)
This can get confusing...
Nice legal precedent the Clinton Administration apparently has established...MUD
THE REPUBLICANS TOOK BACK THE SENATE.