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. Last Updated: 07/27/2016

Bush Lambasts Dirty Business

NEW YORK -- U.S. President George W. Bush on Tuesday called for longer sentences for corporate fraud and a stronger watchdog agency to fight accounting scandals that have shaken investor confidence and threatened to become a political liability.

"My administration will do everything in our power to end the days of cooking the books, shading the truth and breaking our laws," Bush said in a speech outlining his corporate crackdown proposals to about 1,000 Wall Street leaders.

But the speech failed to inspire U.S. stock markets, where indexes have sunk to five-year lows amid scandals at major U.S. companies, including energy trader Enron and WorldCom.

The Dow Jones industrial average weakened after the speech, falling 178.81 points, or 1.93 percent, to close at 9,096.09 on Tuesday.

"What policy-makers won't bring to a quick end is the lack of confidence investors have in corporate U.S.A. That has been damaged to the extent that it's going to take a long time to recover," said Jamie Lewin, market economist for British fund management group Gartmore Investment Management.

The measures proposed by Bush include doubling maximum prison terms for fraud and creating a government financial crimes "SWAT team" to crack down on individual abusers rather than overhauling the system of regulation.

"At this moment, America's greatest economic need is higher ethical standards," Bush said. "With strict enforcement and higher ethical standards, we must usher in a new era of integrity in corporate America."

The president is seeking to double to 10 years the maximum prison terms for mail and wire fraud charges, frequently used in cases of corporate fraud. Bush also would strengthen laws against document shredding and other forms of obstruction of justice -- issues that came up in the collapse of Enron.

Bush proposed a $100 million increase in the Securities and Exchange Commission's budget for fiscal 2003 to hire investigators and buy equipment. This is on top of $20 million he sought earlier this year but is well below the $338 million increase pushed by members of both parties in Congress.

The proposals were tougher than steps Bush announced in March after the accounting scandal at Enron shook U.S. stock markets and appeared to reflect a fear that voters could punish Bush and his Republican party in the Nov. 5 midterm elections.

Recent polls show Bush's overall approval ratings remain high but his marks for the economy slipping. A new CNN/USA Today poll showed his approval ratings for his handling of the economy falling to 58 percent from 72 percent last October.

Democrats said Bush failed to go far enough and urged additional measures such as protection for corporate whistle-blowers and a strong federal board to oversee the accounting industry. "I was pleased with the president's rhetoric today; I was not pleased with his proposals," said Senate Majority Leader Tom Daschle, a South Dakota Democrat.

 A public interest legal group filed a shareholder lawsuit Wednesday alleging U.S. Vice President Dick Cheney and the oil services company he ran for five years, Halliburton Co., as well as accounting firm Andersen, defrauded shareholders through accounting fraud.

The lawsuit filed by Judicial Watch alleges that while Cheney was Halliburton's chief executive officer, he and its other directors inflated revenue reports, which increased the stock's value.

"They overstated their revenues by tens of millions of dollars and that's an understatement," said Larry Klayman, chairman and general counsel at Judicial Watch. The civil suit was filed in Dallas federal court.