"We've had too many cases of people abusing their responsibilities," Bush told reporters in Kananaskis, Alberta, where he is meeting the leaders of the Group of Eight industrialized nations. "When we find egregious practices, such as the one revealed today, we'll go after them," he said.
WorldCom, the United States' second-largest long-distance carrier, has disclosed improper booking of expenses to boost profits--a $3.8 billion accounting scandal. The company said it would restate results for the last five quarters, erasing all profits from the beginning of 2001.
The revelation rivals the downfall last year of energy trading giant Enron, and comes amid a growing public distrust of U.S. corporations that is sapping investor confidence. Markets plunged Wednesday as WorldCom teetered on the brink of bankruptcy.
Bush has been watching with increasing anger as top executives in corporate America take big buyouts while their companies implode and reports of accounting malpractice mount, telling aides he is "mad as hell" about it.
Seeking to reassure anxious U.S. and foreign investors, Bush brought up the WorldCom controversy himself during a meeting with British Prime Minister Tony Blair.
"I am deeply concerned about some of the accounting practices that take place in America," Bush said. He called reports that WorldCom disguised $3.8 billion in expenses "outrageous" and said: "We will fully investigate and hold people accountable."
The market, he said, "isn't as strong as it should be," and listed three reasons: corporate profits, concerns about another terrorist attack and corporate accounting scandals.
On Capitol Hill, the news prompted U.S. lawmakers to pledge reignited legislative efforts to tighten accounting standards and hold top company executives and investment houses accountable.
"This is reprehensible. Thousands and thousands of employees are now out of work. Thousands more are facing serious financial harm as a result of the manipulations of the books," said Senate Majority Leader Tom Daschle. Daschle said he would seek to get an accounting reform bill on the Senate calendar right away, allowing it to be dealt with as soon as Congress returns from its July 4th recess, and he predicted its passage.
Daschle, D-South Dakota, charged that SEC Chairman Harvey Pitt, formerly a lawyer to the top accounting firms, had a "cozy relationship with the industry" that was keeping him from doing his job.
"He is not doing the job...I don't see the kind of aggressive activity, the kind of attitude in the SEC that we need to do this right," Daschle told reporters.
But Pitt, who announced on Wednesday evening that the SEC was filing a civil lawsuit against WorldCom for fraud, noted that he had been in the job only 10 months.
"In my 10 months on the job, the SEC has laid out and is actively implementing creative and effective solutions to the problems I inherited," the SEC chairman said in a statement.
In addition to Enron's collapse, accounting problems have hit other big-name companies, including Tyco International, Global Crossing and Adelphia Communications.
"There are some concerns about the validity of the balance sheets of corporate America, and I can understand why," Bush said. "There is a need for renewed corporate responsibility in America. Those entrusted with shareholders' money must...strive for the highest of high standards."
After Enron--one of Bush's biggest campaign contributors--filed for bankruptcy last December amid revelations of massive losses from off-the-books partnerships, the president proposed reforms aimed at making companies and their top executives more accountable.
The White House plan would require corporate CEOs to personally certify the accuracy of financial statements and companies to conduct annual evaluations of their procedures for disclosure reporting.
The U.S. Securities and Exchange Commission has written a new regulation requiring CEOs and chief financial officers to certify in quarterly and annual reports that they have read the documents, that all the information is true, and that the reports contain all the information about the company they believe is important to an investor.
False certification would expose executives to potential legal action, both civil and criminal.
The measure is subject to 60 days of public comment under the regulatory approval process, and the SEC hopes to schedule a final vote on the proposal before the end of the year.
"We've had too many cases of people abusing their responsibilities, and people just need to know that the SEC is on it, (and) our government is on it," Bush said. "We will fully investigate and hold people accountable for misleading not only shareholders, but employees as well."
Nevertheless, he told reporters, "Most corporate leaders in America are good, honest, open people who care deeply about shareholders and employees, and our economy is strong."