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. Last Updated: 07/27/2016

Lobbyists Choke U.S. Reforms

WASHINGTON -- For months, the skies over Capitol Hill have rained post-Enron reform proposals, but the legislation effort is slowly evaporating under the heat applied by business opponents.

So far not one of over 50 proposed reforms, from changes in pension rules to stronger oversight of accountants, has become law. Some lobbyists on both sides of the issues are wondering if major Enron-related reform will pass Congress this year.

Last year's collapse of energy-trading behemoth Enron Corp. amid charges of accounting chicanery started what seemed an unstoppable rush to tighten rules governing business.

But many Enron-inspired bills have not made it out of congressional committee, and others are getting stalled between the two chambers of Congress, closely divided on party lines.

The Republican-run House of Representatives has passed reform measures for pensions and accounting that some Senate Democrats deride as weak. But these Democratic proponents of tougher action face determined opposition in their own chamber, where they have a slim majority of one.

Last week a major accounting proposal faltered in the Senate Banking Committee after lobbying by business opponents.

"You would think, given all that's happening ... there would be a surge of response that would be unstoppable. That is not the case," former Federal Reserve Chairman Paul Volcker said.

"I think it's kind of an uphill battle, but I'm hopeful," said Volcker, who recently abandoned his effort to restore the reputation of accounting firm Andersen, the auditor of Enron's financial statements.

Business, fearing an overreaction to Enron that would increase government's role in commercial matters, is pleased to be gaining in restraining lawmakers.

But consumer advocates, who say they want to protect the investments of ordinary people, are worried.

"It may be that this will be a huge missed opportunity. They were all yelling and screaming, reform, reform! But industry has come down like a ton of bricks in the halls of Congress," said Sally Greenberg, senior counsel to the Consumers' Union.

"If there is no reform, it is going to be an absolute outrage," she added.

The bill that stalled in the Senate Banking Committee, by Maryland Democratic Senator Paul Sarbanes, is seen as one of the last chances for systemic accounting reform this year, if reconciled with the House-passed bill that is seen as more business-friendly by Representative Mike Oxley, an Ohio Republican.

Last week the Chamber of Commerce and accounting industry lobbyists blanketed the Senate with letters opposing Sarbanes' bill. Then Sarbanes, the banking committee chairman, canceled a "markup" session to consider the bill after 123 amendments to it were filed -- many of them proposals from Republican Senators Phil Gramm of Texas and Michael Enzi of Wyoming.

Sarbanes' spokesman, Jesse Jacobs, said another markup would be scheduled. Meanwhile, he said, the senator and his staff were "continuing to talk with members, trying to reach a consensus to move forward."

But even if the bill escapes committee, "the question is whether some senators decide to obstruct it on the floor," said a Democratic congressional aide who asked not to be named.

Another Enron-inspired reform measure, one that would have regulated over-the-counter energy derivatives, died on the Senate floor in February when Gramm and other opponents threatened it with a filibuster. Its sponsor, California Democratic Senator Dianne Feinstein, has vowed to reintroduce it.

Gramm's wife Wendy is on the Enron board of directors, but his spokeswoman denies this connection is motivating him to block Enron-related reforms.

"That is so untrue," said the spokeswoman for Gramm, who will retire this year. "When he does something, that he thinks is right, that people don't like, he doesn't care, he's proud of it."

A bill by Vermont Democratic Senator Patrick Leahy to stiffen criminal penalties for securities fraud has been approved by the Senate Judiciary Committee, and it could become a vehicle for other Enron proposals when it reaches the Senate floor.

Another issue raised by Enron -- what to do about workers whose retirement savings are wiped out when a company's stock collapses -- has drawn ideologically opposite responses in the House and Senate.

The House approved a bill by Ohio Republican Representative John Boehner to give workers more control over their retirement savings. But it is not as prescriptive as a Senate version by Massachusetts Democratic Senator Edward Kennedy that is strongly opposed by business.