Will the President's Wall St. Speech Matter?

July 9 -- President Bush went to the heart of corporate America today and gave Wall Street a scolding about the recent accounting scandals, outlining his plan to crack down on corruption and greed.

But will it make a difference? To what extent will the president's lecture about the need for morality in the business culture actually change corporate behavior?

Many business leaders say the president's proposed new penalties would change behavior.

"If you rob a bank, you go to jail," said Richard Grasso, the chairman of the New York Stock Exchange. "If you rob investors, you should go to jail. Nothing more complicated than that."

Had the tougher sentences called for by Bush been in place, notorious corporate criminals such as Ivan Boesky, Michael Milken and Charles Keating might have spent more time in prison. As it was, the three of them collectively only served nine years.

However, actually convicting a white-collar criminal is no simple matter.

"It can be done and it has been done," said John Coffee, a professor of law at Columbia University Law School. "But it's not easy. It also takes a long time."

In 1997, for example, the New York-based Cendant Corporation was accused of massive financial fraud and paid $3.2-billion in a securities-fraud settlement. Five years later, two top executives, Walter A. Forbes and E. Kirk Shelton, have denied guilt and are still awaiting trial.

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Reformers: Bush Needs More Bite

Corporate watchdogs say Bush will never truly restore investor confidence until he pushes through reforms that are more far-reaching than the ones he proposed this morning.

"I have to say that my reaction is one of sadness," said Bob Monks, a shareholder activist. "I think this was a great opportunity and an opportunity missed."

Bush says he wants to create a "new ethic of corporate responsibility." His critics say at best he took only a step in the right direction.

Reformers say the president must go further in pushing for tougher standards for accountants, more independent boards of directors to oversee company executives and changes in the way CEOs are paid. The Bush plan, for example, would have done nothing to stop Enron executives from publicly boosting the company's stock while privately selling their own shares.