CORPORATE CONDUCT: THE PRESIDENT; Bush Signs Bill Aimed at Fraud In Corporations

In a sign of how profoundly the nation's business scandals and volatile stock market have rocked his administration, President Bush signed a sweeping corporate-fraud bill today with central provisions that he opposed just three weeks ago.

Even though he had objected to the provisions earlier and had promoted his team's corporate experience in his presidential campaign, Mr. Bush cast himself today as the protector of the small investor and the rank-and-file worker.

Vowing stiff punishment for corporate wrongdoers, Mr. Bush bluntly threatened, ''No more easy money for corporate criminals, just hard time.'' He called the legislation ''the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.''

Mr. Bush spoke on an East Room riser flanked by key members of his economic team and Republican Congressional leaders as well as by smiling Democrats like Senator Tom Daschle, who until recently had criticized the president as sluggish in response to the corporate scandals.

But this morning the White House created a political tableau of a Washington united, with the president positioned at center stage. ''The era of low standards and false profits is over,'' Mr. Bush said. ''No boardroom in America is above or beyond the law.''

The bill, an extensive overhaul of corporate fraud, securities and accounting laws, creates a regulatory board with investigative and enforcement powers to oversee the accounting industry and punish corrupt auditors. It also establishes new standards for prosecuting wrongdoing and gives corporate whistle-blowers broad new protections. Executives who deliberately defrauded investors would face long prison terms.

The evildoers, the president said, were corporate executives, who were notably scarce in a room lighted for television and crowded with members of the House and the Senate who had jumped on the corporate responsibility bill juggernaut as it raced through Congress this month.

''Free markets are not a jungle in which only the unscrupulous survive, or a financial free-for-all guided only by greed,'' Mr. Bush said. ''For the sake of our free economy, those who break the law -- break the rules of fairness, those who are dishonest, however wealthy or successful they may be -- must pay a price.''

With top law enforcers from his administration in the room, including Attorney General John Ashcroft and Harvey L. Pitt, the chairman of the Securities and Exchange Commission, the president said that ''tricking an investor into taking a risk is theft by another name.''

Despite the president's verbal pyrotechnics, Democrats were already trying to seize the political upper hand by saying that the new law was a good first step but that it hardly went far enough -- and by pointing out that the White House had been corralled into supporting it.

''They had to be convinced of its merit, but once convinced, they were supporters, and I'm grateful for that,'' said Mr. Daschle, the Democratic majority leader, who said that he wondered why Mr. Bush's Justice Department had not yet indicted executives of Enron, the corporation whose December 2001 bankruptcy was opening day to the current corporate scandals. As the allegations of corporate wrongdoing mounted in recent weeks, Mr. Daschle was among those who called for Mr. Pitt's resignation.

At the signing ceremony, Mr. Daschle stood behind Mr. Bush and alongside Senator Trent Lott, the Republican minority leader. Next to Mr. Lott stood the bill's two sponsors, Senator Paul S. Sarbanes, Democrat of Maryland, and Representative Michael G. Oxley, Republican of Ohio. But it was Mr. Daschle who got the first handshake from Mr. Bush and the first presidential pen of the four that were used in the bill signing.

The ink was scarcely dry by the time Senator John Edwards, the Democrat from North Carolina who is thinking of running for president, issued a statement later today calling for corporate executives to disclose their pay voluntarily. Representative Richard A. Gephardt of Missouri, the House minority leader who is also considering a run for president, also issued a statement, calling for enactment of a broader set of initiatives and declaring that Congress and the White House had to do more.

Even Mr. Pitt, who earlier in the year called such a bill largely unnecessary, said it was too soon to tell how much abuse the legislation would actually prevent.

''I think this bill is just really a very important first step in restoring confidence,'' Mr. Pitt said in the East Room crush after the signing. ''Now we have to implement it. We've got our hands full.''

Rarely has an issue caught such instant bipartisan fire in Washington. This one was fueled by nearly daily disclosures of corporate fraud, the plummeting stock market and politicians' concerns that voters would hold them responsible.

The terrain was strikingly different as recently as April, when the Republican-controlled House passed a limited bill to curb corporate fraud. A far tougher version in the Democratic-controlled Senate was languishing because of opposition from the accounting industry and prominent Senate Republicans.

But then came the collapse of WorldCom in June, along with renewed attention to the corporate stock dealings of Mr. Bush when he was a director of a Texas oil company. In addition, Halliburton, the Texas energy services company where Vice President Cheney was chairman and chief executive, is under investigation by the S.E.C. for some of its accounting practices.

The Senate bill, sponsored by Mr. Sarbanes, was given new life and passed unanimously on July 15. Though the White House had long expressed concerns about that bill, by then Mr. Bush's advisers were growing increasingly worried about the stock market and declining investor confidence. After declaring that the economy was suffering a ''hangover'' from an economic binge of the last decade, Mr. Bush strongly hinted that he was inclined to sign almost any bill that emerged from negotiations between the House and the Senate.

Those negotiations were completed last week on the same day that former executives of Adelphia Communications were led away in handcuffs on charges that they had looted the cable company of more than $1 billion -- yet another corporate scandal that helped galvanize support for the tougher legislation.

Today, Mr. Bush called the bill signing ''this historic occasion'' and praised Mr. Sarbanes and Mr. Oxley as ''persistent voices for reform.''

Mr. Bush also said that the United States economy was fundamentally sound and that more than 200 federal prosecutors were already at work trying to root out corporate fraud. ''Every corporate official who has chosen to commit a crime can expect to face the consequences,'' he said.