With corporate accounting scandals making headlines across the nation, President Bush has spoken out against unethical behavior on behalf of corporate executives. U.S. Labor Secretary Elaine Chao joined MSNBC.com to talk about the Bush administration’s plans to encourage greater corporate responsibility to restore Americans’ confidence in the markets. Chao took questions from MSNBC.com users over the phone from her office at the Department of Labor in Washington, D.C. Chat producer Will Femia moderates.
MSNBC-Will Femia: Welcome, Secretary Chao.
Elaine Chao: Thank you.
Question from Jason Peel: Do you think we’ve seen the last of these scandals or are more to come?
Elaine Chao: The president has said that the majority of people who work in these corporations are good and honorable people. There are some bad actors and the president’s very concerned about making sure that these bad actors do not undermine the confidence of the financial markets.
Question from Joel: What is the president going to do to overcome his credibility issues given his stock sales history and personal loans at Harken? Will we see some big solid convictions and punishments to show that the President means business and isn’t just going to take care of his peers?
Elaine Chao: I think that’s a very unfair characterization of the president in terms of his background. He cares for all the people and he’s been in the forefront of assuring that we have a robust stock market, that we have a robust economy, so that people can have jobs, so that people can have opportunities.
The president has rolled out a very aggressive enforcement program for people who abuse the public trust. For example, he has put forth this Public Fraud task force, which will criminalize and increase the criminal penalties for people who have abused the laws. And in addition, the president has said that corporate officers should be made more accountable so if they are found to have abused the public trust, they can not hold future positions in any corporations and in addition, if they have made any money through these allege abuses, they must disgorge, which means they have got to give back all the profits.
These are actions that will be pursued by the full force of the government. We will pursue active enforcement, aggressive enforcement. People who have abused the laws will be punished severely.
Question from Margie: What and who is going to be responsible for misleading the public of earnings? Who is going to pay the price? I don’t think Americans are as dumb as you may think. I’m angry and I want to see the business people who report false earnings accountable for their lies to the public.
Question from Marlene: Why is there so much confusion about who is responsible? Shouldn’t it be clear that whoever’s name is signed on the line, whoever is in charge, they’re responsible, end of story, put them in jail, take away their mansions.
Elaine Chao: I can certainly empathize with the anger and the disappointment that’s voiced by the questions. The president has said CEOs need to be accountable and one of his proposals is to have CEOs sign off on the veracity and the accuracy of the public statements that their companies issue.
The president put forth this proposal last March. The House of Representatives has acted on this; the Senate has not. So we hope that the Senate will work with the president to pass the president’s program for greater accountability for corporate CEO’s.
Question from George: What does the president think of the Lehay bill going through the Senate now? Does he think it’s too tough? If so, why? Would it be bad for business?
MSNBC-Will Femia: I think [the questioner] means Leahy, and I’m not sure it’s his bill, but let’s talk about the legislation that’s in the Senate, regardless of the attributions.
Elaine Chao: There are all sorts of amendments being offered but the most relevant one is Sen. Sarbanes’ and that’s the one that is probably the one that the administration will most likely have to work with. But I think that all our goals are the same, and that is we want to ensure a marketplace of fairness and transparency and clarity. We want the financial market to accurately reflect the economic activities of corporations in this country. We want public statements to be true and accurate. We want corporate leaders to be accountable to their shareholders, to their employees, and to their various stakeholders.
We have an economy that is just coming out of a recession. The attacks of Sept. 11 caused 1.5 million jobs lost and it’s a true testament to the strength and resiliency of our economy that we’re on the road to recovery so quickly. But our continued economic recovery will depend upon faith and confidence in the integrity of our financial markets.
That’s why the president and I are so very concerned about maintaining that trust and confidence in our financial markets. I am particularly concerned about what is happening with corporations, because my department has the responsibility of protecting workers.
When companies go belly-up or when they encounter financial difficulties and workers’ pensions are endangered, I am concerned about that. We have rules and regulations and laws here that protect workers, their pensions, their health care benefits through their employers, and their retirement savings. So I am very interested and concerned about protecting workers’ rights and workers’ security in this economy.
Question from dragon: How are you going to protect workers from losing their pension?
Question from Tom: Can you explain to us what role your department plays in protecting my 401K plan? I’m worried that the money I have in my 401K might not be safe.
Elaine Chao: The president has proposed a pension reform bill that he introduced to the Congress on Feb. 1. It basically gives workers choice, confidence, and control over their own retirement savings. The president’s bill will give people choice as to what they want to invest in and how they want to invest it. So there will not be any blackout period that would prohibit them trading in one company stock for example.
The president is also concerned about giving workers confidence that they’re making the best investment decisions possible. The president’s program would all employers to bring in outside professional assistance to help educate their workers so that workers can make intelligent and wise investment decisions. The president’s program would also give workers control over their retirement security by ensuring that whatever the top executives do, the workers would have the same control. So if top executives could sell their stock at any time well then workers could sell their stock at any time as well.
The president’s proposal was sent up to the Hill, as I mentioned, on Feb. 1. The House of Representatives has acted, the Senate, again, has not. So we urge the Senate to work with this administration and this president to help pass his pension reform bill.
The reason why I am concerned, as I mentioned before, is that the Department of Labor looks out for the American worker. We protect their retirement security, retirement savings, we help ensure a safe workplace, we protect American workers’ rights in work sites all over America.
Question from John: Why has the president failed to fill two vacancies on the five-member SEC? Wouldn’t filling those seats improve the commission’s ability to clean up corporate crime?
Elaine Chao: Absolutely. And I would add, the president has added an additional 100 million dollars in enforcement to the SEC. Currently the president’s nominees are being held up by Senator McCain and Senator Dashcle. All of the president’s nominees as well as the president’s judicial candidates are being held up by the Senate majority leader and also Senator McCain. So we would love to see the president’s nominees appointed to the SEC. As the question correctly points out, that would certainly help to increase the efficacy of the SEC.
Question from Michael Corleone: This is a war on greed and corruption and we need a war time consigliore. The “kinder, gentler” Harvey Pitt is not a wartime consigliore.
MSNBC-Will Femia: I couldn’t resist the Godfather reference. :) Seriously though, do you think he regrets that pledge?
Elaine Chao: I think the media’s criticism of the Chairman of the SEC has been very unfair. It is true he has worked in the past with accounting firms. But many people have worked with many, many other firms as well. Harvey Pitt took a pledge when he entered the federal government that he will protect investors and ensure the integrity of the financial markets. He’s a man of integrity and he will carry out his responsibilities.
Question from Bruce: The U.S. Sentencing Commission already offers an incentive for having an effective business ethics program. Will there be any movement to enhance that?
Question from Bruce: President Bush called for enhanced whistle-blower protection? What are the specifics of that enhancement? What does that mean?
Elaine Chao: I think corporate CEOs and other corporate leaders have certainly been reminded, if they ever needed to be reminded, that corporate integrity is the touchstone of their companies’ value. I mean let’s look at Martha Stewart. Martha Stewart is a household name. She is allegedly involved with some insider tips, and her company has lost hundreds of millions of dollars in value. Her company’s stock has dropped 16 percent.
There’s real consequence to corporate misconduct. The market is jittery, the market is unforgiving and they will not put up with any alleged misdeeds on the part of any organization. We see this in the drop of the stock market. We see this in the drop in the values of individual companies who have been brushed or even tinged with any suspicion of allegations of misdeeds.
Question from Michael Ryan: I know everyone is angry and wants the president to slam these scammers, but doesn’t the government have to bail out these companies if only for the sake of the economy? Otherwise we’ll be looking a huge number of people out of work.
Question from sg: Is there a danger that politicians may over-react and end up hurting business?
MSNBC-Will Femia: What are the unemployment implications of all these scandals?
Elaine Chao: I think the danger of overreaction is always there. When we talk about confidence and trust, those are very fragile treasures of our country and of our society. So we always have to be cautious and careful if we are public officials in our public pronouncements, that we take care not to arouse more public panic and outcry.
On the subject of unemployment the president and I have always been concerned about dislocated workers. After the attacks of Sept. 11, which, as I mentioned, caused a loss of 1.5 million jobs, the President launched a very comprehensive, robust program to help dislocated workers. We extended unemployment insurance an additional 13 weeks. My department alone has spent additional monies in helping dislocated workers access new training to transition into other jobs. My department here alone has a budget of $45.5 billion, all dedicated to helping dislocated workers get transitional assistance, get new training if they need it to find new jobs and also help place people in news jobs.
We have over 1800 local, one-stop career centers all throughout the whole country. They are job placement offices for people who want to find new jobs. For anyone interested in finding a new job, they should call 1-877-US2-JOBS.
There are counselors available at these one-stop career centers. There are computers available for people who wish to surf the net. There are people who are ready to help guide someone who’s looking for a new job as to where to look, how to access new training, how to work the computers, how to put together their resumes if they’re interested in doing that.
These offices are very pleasant, they’re friendly and welcoming.
MSNBC-Will Femia: Is there a Web site for this?
Elaine Chao: Yup. We would suggest that people go to www.DoL.gov and go into “employment training administration.” It’s a customer-friendly site, so you should not feel intimidated. There will be lots of sites for you to go to in searching for new employment.
MSNBC-Will Femia: I know you have to run, Secretary Chao. I appreciate you fitting us into your schedule.
Elaine Chao: Ok. I’m going to go and talk to the Hispanic Congressional Caucus up on the Hill and tell them all the great things and great outreach efforts that we have been making to Hispanic workers in this country.
MSNBC-Will Femia: Thank you.
Elaine Chao: Not at all. Call me back another time!