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WASHINGTON (AP) -- A full lineup of government enforcers -- but not a single CEO -- stood witness in the East Room as President Bush, with tough talk, signed into law Tuesday the most extensive crackdown on boardroom fraud since the Depression era.

He promised his administration would go after corporate crooks, who have stalled the sputtering economic recovery, as aggressively as it has hunted terrorists.

``Corporate corruption has struck at investor confidence, offending the conscience of our nation,'' the president said.

``Yet, in the aftermath of September the 11th, we refused to allow fear to undermine our economy and we will not allow fraud to undermine it either,'' he added, flanked on one side by Attorney General John Ashcroft and Treasury Secretary Paul O'Neill, and on the other by key lawmakers.

Given front-row seats beneath the East Room's crystal chandelier's were FBI Director Robert Mueller, New York Stock Exchange Chairman Richard Grasso, and Securities and Exchange Commissioner Harvey Pitt, who has broad discretion in implementing many of the new law's provisions.

Sen. Paul Sarbanes, D-Md., who wrote the legislation with Rep. Michael Oxley, R-Ohio, questioned afterward whether Pitt's enforcement will be meaningful.

``I'd like for the jury to sort of watch,'' Sarbanes said.

The law, which passed the Senate by 99-0 and the House by 423-3, quadruples sentences for accounting fraud, creates a new felony for securities fraud that carries a 25-year prison term, places new restraints on corporate officers, and establishes a federal oversight board for the accounting industry.

``No more easy money for corporate criminals, just hard time,'' the president said. ``... The era of low standards and false profits is over; no boardroom in America is above or beyond the law.''

At a small desk, Bush drew from a pile of five pens and punctuated his signature on the bill with a firm tap. He then presented one souvenir pen to each lawmaker who joined him on stage: Sarbanes, Oxley, Senate Majority Leader Tom Daschle, D-S.D., and Senate Minority Leader Trent Lott, R-Miss.

Bush tucked away the fifth pen for display in his future presidential library, aides said.

Sen. Patrick Leahy, D-Vt., took snapshots from the audience.

The final bill was tougher than Bush had proposed and included measures he and many fellow Republicans initially resisted. But as WorldCom's collapse signaled the Enron-Arthur Anderson problem was no isolated problem, Bush and lawmakers from both parties rushed to embrace the stricter legislation -- all of them eager to keep public outrage over the business scandals from darkening their prospects in the Nov. 5 midterm elections.

Bush's own transactions as a one-time director of Harken Energy Corp. have drawn renewed scrutiny and the SEC is investigating Vice President Dick Cheney's tenure as CEO of Halliburton. As the administration tries to shelve its reputation for being cozy with big business, Tuesday's guest list struck an ``us vs. them'' theme.

Dozens of government officials and individual investors, representing the millions of Americans who lost their savings, crowded the East Room while corporate bigwigs were shut out.

White House press secretary Ari Fleischer noted, however, that Business Roundtable president John Castellani was present and called him ``no shrinking violet when it comes to representing corporations.''

Cheney was at a campaign fund-raising breakfast in Iowa.

Bush's speech conveyed the general public distrust built up by recent scandals.

Members of the House and Senate piled on with a blizzard of news releases.

``Now it's time to take their yachts, Lamborghinis and ski chalets. Crooks don't deserve to keep what they steal,'' Rep. Mark Foley, R-Fla., said in his press release.

New Jersey has always been a good state for scandals, and last week provided two. One, the case of Web-snooping by a Princeton admissions officer, which involved a total of 11 applicants to Yale, was the subject of front-page stories across the nation. (Disclosure: I'm a Princeton professor.)

The other — further revelations about the way dishonest budgeting by former Gov. Christie Whitman crippled the state's finances — has dire implications for all of the state's eight million people, who face the prospect of higher taxes on their houses, more potholes in their roads, fewer teachers in their children's classrooms and worse medical care for their parents. This story received no national coverage at all.

Experts already knew that the Whitman administration had used creative accounting to justify a series of tax cuts. Last year New Jersey Policy Perspective, a local think tank, released a study of fiscal policies in the 1990's titled "Take the Money and Run." Among other things, the state stopped contributing to its pension funds. This made the budget look a lot better, but created a financial hole. In an attempt to fill that hole Governor Whitman violated the basic principles of pension funds by having them engage in stock arbitrage, borrowing money to speculate on the market.

Now the state's taxpayers must make up for an investment loss of $22 billion, most of a year's tax receipts. But don't cry for New Jersey; Mrs. Whitman wasn't alone in her misbehavior.

For one thing, many corporations with pension plans used a similar trick to inflate their bottom lines. As the current issue of Business Week explains, the pension time bomb involves large numbers; I'd say it's the equivalent of at least 50 WorldComs.

Furthermore, Mrs. Whitman's policies were by no means the worst among the states. That honor may fall to Tennessee, though Alabama, where a cash crunch stopped all jury trials for awhile, may run a close second.

The fact is that in recent years many states have been run like banana republics. Responsibility gave way to political opportunism, and in some cases to mob rule. When Tennessee considered a tax increase last year, legislators were intimidated by a riot stirred up by radio talk-show hosts. Only when lack of cash forced the governor to lay off half the work force did the state, which has the second-lowest per capita taxes in the country, face up to reality.

The only reason Tennessee doesn't look like Argentina right now is that it isn't a sovereign nation; since the federal budget was in good shape until recently, there's a safety net. And the federal budget was in pretty good shape because the Clinton administration, unlike state governments, behaved responsibly. Budget projections were honest — if anything, too cautious — and boom-year surpluses were used to reduce debt.

But the responsibility era is over. Even as state governments face up to the consequences of cooked books in the 1990's, the Bush administration is following in their footsteps.

The latest antics of the White House Office of Management and Budget have even the most hardened cynics shaking their heads. It's not just that projections for fiscal 2002 have gone from a $150 billion surplus to a $165 billion deficit in the space of a few months; it's not just that the O.M.B. projects a much smaller deficit next year, when everyone else — including the Republican staff of the Senate Budget Committee — says the deficit will increase. It's also the fact that O.M.B officials simply lie about what their own report says.

"The recession erased two-thirds of the projected 10-year surplus. . . . The tax cut, which economists credit for helping the economy recover, generated less than 15% of the change." So reads the agency's press release. Yet as the Center on Budget and Policy Priorities points out, the actual report attributes 40 percent of the budget deterioration to tax cuts, only 10 percent to recession. Maybe dishonesty in the defense of tax cuts is no vice.

State governments turned into banana republics in part because voters didn't realize that a charming, personable chief executive can also be an irresponsible opportunist, seeking political advantage through policies that ensure a fiscal crisis on someone else's watch. Now the same governing style has moved to Washington. And this time there's no safety net.

(7/27/02) - What I'm about to propose reminds me slightly of the final scene in "The Life of Brian," in which the faux messiah and his followers, hanging crucified on a row of crosses, burst into happy song: "Always look on the bright side of life!" But you don't really have to be in a Monty Python mood to think that the cascade of grim tidings from Wall Street is, in many ways, good for us.

I know the accounting scandals, bankruptcies and vaporized stock values have caused real pain. With deep sympathy for the victims, though, it seems to me this is one of those inevitable, chastening moments from which the country may benefit in important ways — is, in fact, already starting to benefit.

To begin with, the crisis has deflated an artificially inflated market, and forced us to face up to the fact that we were living an economic lie. All those grinches who warned against stock values built on vague promises of future profits were right, and — c'mon, be honest — even as we sucked the nitrous oxide we kind of knew it. Any recovery begins with an honest reckoning.

The truth may empty your pockets, but it will also set you free. Over the past decade we have been absurdly captivated by the stock market. The Dow became our national mood ring. Investing went from being a form of savings to being a kind of lottery. We became a nation lined up on its elliptical trainers, pedaling to nowhere while staring blankly at the market ticker on CNBC. We didn't want to be like Mike. We wanted to be like Phil Jackson, clicking trades on his laptop. The fact that Americans are losing faith now is no bad thing; we've been worshiping in a casino.

It was not just individual Americans who were swept up in the euphoria. Market worship infested businesses everywhere. It is true, as President Bush keeps saying, that the great majority of corporate leaders are decent, honest men and women, and the larcenous, book-cooking greedheads are a tiny minority. But executives today operate in a culture perverted by the spirit of the instant payoff. That gambler instinct may make sense for Internet start-ups and other companies based on notions rather than assets. But stimulated by the proselytizing of management consultants and the siren song of Wall Street, even solid, steady companies began to behave like teenagers in heat.

My father was a C.E.O., who retired in 1989 with both his company and his reputation in robust health. He and his business friends watch the scandals now with amazement and horror, not so much at the venality as at the madness of corporate life. How did share price become the sole measure of success? How did corporate executives start feeling they had to spend half their time doing lap dances for market analysts? How did even industries whose accomplishments take years — bringing an oilfield on line, developing a new automobile — start jerking to the tempo of quarterly reports?

One answer is that during the 90's, executive rewards were so closely pegged to the stock price that the temptation to jack up the company's short-term value was irresistible. Stock options, the right to buy shares at a set price even after the value goes up, have been rightly celebrated as a way of giving workers and executives a stake in the company. But for top executives they grew wildly out of proportion, encouraged by the absurd fact that companies didn't have to count them as expenses against their bottom lines. Often there was little restriction on how soon they could be cashed in. If a sudden bump in the stock price means you can claim your options and reap a princely windfall, what's your incentive to think about the long term? So instead of settling for honest balance sheets that will not thrill Wall Street, you look for artful (mostly legal) ways to goose the bottom line. Instead of making investments that will sustain the company, you make trendy investments that will seduce stock buyers now — hey, let's string a zillion miles of fiber-optic cable!

In any case, your board was probably hammering you to keep up with the hot market. One symptom of the mania for quick results is that companies that used to train up generations of executives, breeding skills and loyalty, now hire and fire the talent like free-agent relief pitchers. A recent study by the management consulting firm Booz Allen Hamilton reports that although C.E.O.'s with longer tenure generate substantially better profits, the rate of turnover increased by more than 50 percent in the last half of the 90's.

When everyone was feasting together, moreover, it was easy to overlook that the system had grown some blatant conflicts of interest. The consultant who taught you how to evade your taxes was partners with the auditor who testified that your accounts were on the up and up. The investment banker who underwrote your expansion was joined at the hip to the stock analyst who rated your stock. The directors of the company were too often well-stroked pets of the chief executive they were supposed to oversee.

These corrupting arrangements are now being challenged, a little by legislation, a little by regulation, and in large part by angry shareholders, corporate executives and boards trying to save their companies' skins. The excesses of stock options are likely to be reined in. The conflicts of interest are being sundered. There will be fuller disclosure and tighter accountability, at least until the inventive minds of American capitalism open new loopholes. Integrity has regained some standing as a marketable corporate value. Witness the move by companies to occupy the moral high ground — Coke by leading a move toward treating options as an expense, Charles Schwab by aggressively advertising the fact that its advisers do not get commissions for pitching you bad investments.

"American capitalism goes through this all the time," said Irwin M. Stelzer, director of regulatory studies at the Hudson Institute. "The question this time was, does it still have its self-corrective powers? I think the evidence is that it does. It's amazing the speed with which the corrective antitoxins were injected into the system."

Here's another cheering prospect. This shift in the zeitgeist may stimulate a healthy resistance to the overweening influence of corporate lobbies. I'm betting we won't be privatizing Social Security anytime soon, despite the president's continued devotion to the scheme. Legislation to stop companies from dodging taxes by setting up phony headquarters in Bermuda is at least up for discussion. The Bush tax cut — mother of all deficits — still seems nearly invulnerable, but who knows? And it's possible that the scandals may even have created enough of a backlash that industry lobbies will not quite so easily have their way on issues like health care and the protection of the environment.

Democracy, like capitalism, also has antitoxins. They are called elections, and the next ones promise to be a lot more interesting. It was hard to stir much resentment of politicians who served the fat cats when we were all hoping to be fat cats. Now that our aspirations have been downsized, one can hope we will get, along with a lot of cheap populism, some serious discussion about our national priorities.

There is no reason voters' wrath should be reserved for Republicans. Democrats like Tom Daschle and Joseph Lieberman and Chris Dodd and Charles Schumer, for example, have helped smother important corporate reforms, and there are plenty of Congressional Democrats who act like wholly owned subsidiaries of special interests.

But the Democrats enjoy the distinct advantage of running against a party and a president that put the lazy in laissez-faire, the party of the post-Enron shrug, the party of Harken and Halliburton, the party of the Enron-tainted Army Secretary Thomas White. The Democrats get to run against Harvey Pitt, who, whatever his skills as S.E.C. chairman, must be the most politically tone-deaf man to serve in Washington since Earl Butz, who memorably justified junk-food school lunch programs by declaring that ketchup is a vegetable. Mr. Pitt is the man who took office promising a "kinder, gentler" S.E.C., who spent his first year recusing himself because every other case involved former clients, and who then told Congress he was willing to do his job from now on if he got a 20 percent pay raise and cabinet status. The Democratic National Committee could not have invented Harvey Pitt.

And what of Mr. Bush's future? A lot can happen in two years, of course, and he seems to lead a charmed life. (For a while this summer it even looked as if Martha Stewart was going to take a bullet for him. The TV and tabloid fascination with her stock dealings briefly obscured the president's complacency.) But at the rate he's going, Mr. Bush will be lucky to steal a second term.

(7/25/02) - Responding to the bombshell revelation that senior bankers at Citigroup actively helped Enron hide billions in debt, Enron Lawyer of Last Resort Robert Bennett deftly summed up the real reasons for the current economic crisis: "Most of the problems -- not all of them -- are things that have been legal and acceptable".

And while honest lawyers are about as common as undercompensated CEOs, in this case, Bennett is actually telling the truth.

In a world where the "generally accepted accounting principles" are so generally and deliberately Byzantine -- and over 100,000 pages long -- the problem isn't what is illegal but rather what is legal. How can any right-thinking person consider legal, for example, a stock that counts as debt on the company's tax return but as equity on its balance sheet?

And yet that's exactly what the white-coated geniuses at the Goldman Sachs loophole lab created when they invented Monthly Income Preferred Shares -- given the cute and cuddly nickname Mips. The shape-shifting security was hailed as "a breakthrough" by Goldman and "a coup" by the starry-eyed cheerleaders in the business press.

It is emblematic of the kind of corporate culture we live in that a practice that the man on the street would consider blatantly illegal is not only legal but touted as a breakthrough and a coup. And it is a breakthrough, of a sort. After all, it's not easy to take something so unequivocally wrong and make it legal.

Indeed, back in 1997, when the Treasury Department was trying to curtail the use of Mips, Jon Corzine -- now a member of the Senate Banking Committee, then Goldman Sach's CEO -- signed an overheated letter to Congress that decried government efforts to "impose completely arbitrary" distinctions between assets and liabilities.

Which is tantamount to saying that people should stop making "completely arbitrary" distinctions between right and left or black and white. Or, perhaps more to the point, right and wrong. Yet it is precisely this inconvenient distinction between what is debt and what is not that Citigroup helped Enron eradicate. It's as if I went out to dinner and, when the check came, offered my phone bill as payment.

To this day, Corzine, even as he stands amidst a business landscape strewn with the body parts of exploded companies and blown up retirement plans, continues to defend what he calls his former company's "aggressive tax policy". "Lawyers said it was right. Accountants said it was right. And the courts said it was right." In other words: everyone had drunk the New Economy Kool-Aid.

There seems to be nobody out there who is willing to come clean and admit wrongdoing. And unless this happens, we will not be able to turn the page on the ugliness that currently threatens our economic stability.

The change has to start at the top. And that means more than just holding CEOs accountable for what's in their corporate reports. It also means holding Dick Cheney accountable for what went on during his time at the helm of Halliburton, holding Jon Corzine accountable for the "breakthrough" business practices at Goldman Sachs, and holding Robert Rubin accountable for what went on under his watch -- both at the Treasury and at Citigroup.

The time has come for Rubin to come out of his Park Avenue office and make an appearance in front of one of the many Congressional committees investigating corporate chicanery. Especially since, as part of his $40 million a year gig at Citigroup, he phoned both Bush's Treasury Department and a top credit-rating agency in an effort to delay the downgrading of Enron's credit rating -- and, thus, allow the company to continue defrauding the public.

What is stunning is that even after all the suffering caused by Enron's deception, when questioned about the ill-advised phone call to Treasury Rubin still maintains: "I would do it again."

So, I suspect, would many, many others. This defiant arrogance is still the order of the day in Washington. Witness the shameless attempt by House Republicans to turn the public outrage over corporations that avoid paying taxes by getting a PO Box in Bermuda into a massive windfall for corporate America. Cloaking themselves in the mantle of reformers, they have brazenly crafted a bill that temporarily closes the $6.3 billion Bermuda-loophole while creating two much larger -- and permanent -- loopholes that will net American multinationals a combined $60.8 billion. The new bill would also create incentives for companies to invest and create jobs overseas rather than here at home.

It's hard to imagine, but even with the public screaming for reform, behind the scenes on Capitol Hill, the high-level -- and perfectly legal -- gaming of the system continues unabated.

Since the early months of 2000, the Nasdaq has fallen about 75 percent, the broader S.& P. 500 more than 40 percent. These aren't mere paper losses; they translate into disappointment and even hardship for millions of Americans. Now more than ever we need institutions that provide a safety net for the middle class.

Yet George W. Bush still wants to party like it's 1999. On Wednesday he insisted that he continued to favor partially privatizing Social Security.

Bear in mind that ordinary Americans are already more vulnerable to stock market fluctuations than ever before. Twenty years ago most workers had "defined benefit" pension plans: their employers promised them a certain amount per year. During the long bull market, however, such plans were largely replaced with 401(k)'s — "defined contribution" plans whose payoff depends on the market. This sounded great when stocks were rising. But now many will find either that they can't retire, or that they will have to get by with much less than they expected. For some, Social Security will be all that's left.

Mr. Bush first proposed privatizing Social Security back when people still believed that stocks only go up. Even then his proposal made no sense; as I've explained before, it was based on the claim that 2-1=4, that you can divert the payroll taxes of younger workers into personal accounts and still pay promised benefits to older workers. But now even the nonsensical promise that individual accounts would earn stock market returns looks pretty unappealing. So why does he keep pushing the idea?

One reason is ideology: hard-line conservatives are determined to build a bridge back to the 1920's. Another is Mr. Bush's infallibility complex: to back off on privatization would be to admit, at least implicitly, to a mistake — and this administration never, ever does that.

But there may be a third reason. Ask yourself: Who would benefit directly from the creation of "personal accounts" under Social Security?

Those personal accounts won't be like personal stock portfolios. The Social Security Administration can't and won't become a stockbroker for 130 million clients, most of them with quite small accounts. Instead it's likely that a privatization scheme would require individuals to invest with one of a handful of designated private investment funds.

That would mean enormous commissions for the managers of those funds. And those who would be likely to benefit showed their appreciation, in advance: During the 2000 election, according to opensecrets.org, campaign contributors in the two categories labeled "securities and investment" and "miscellaneous finance" (basically individual wheeler-dealers) gave Mr. Bush almost six times as much as they gave Al Gore.

Here, too, Mr. Bush's past is prologue. I reported in an earlier column the story of Utimco, the University of Texas fund that, while Mr. Bush was governor and the current secretary of commerce, Donald Evans, headed the U.T. regents, placed more than $1 billion with private funds, many with close business or political ties to Mr. Bush himself. Among the beneficiaries were the Wyly brothers, who later financed a crucial smear campaign against John McCain. ("Bush reveals his poisonous colors" was the headline of a piece about that campaign, written by the online pundit Andrew Sullivan.)

Could America's retirement savings really be used to reward the administration's friends? Ask the teachers of Texas. In one of many odd deals during Mr. Bush's time as governor, the Texas teachers' retirement system sold several buildings without open bids, taking a $70 million loss, to a company controlled by Richard Rainwater, a prime mover behind Mr. Bush's rise to wealth.

In an Aug. 16, 1998, article in The Houston Chronicle — which should be required reading for anyone trying to understand the Bush administration — the reporter, R. G. Ratcliffe, matter-of-factly summarized this and many other unusual deals thus: "A pattern emerges: When a Bush is in power, Bush's business associates benefit."

Of course, personal Social Security accounts would have to be managed by nationally reputable institutions. Mr. Bush couldn't give the business to his old Texas cronies — could he?

When a politician won't let go of a proposal that, by any normal calculation, should be completely off the table, you have to wonder.

(7/22/02) - NEW YORK -- A new rule forcing corporate leaders to vouch personally for the accuracy of their companies' financial statements has set off a legal scramble, as worried executives search for ways to protect themselves from potential civil or criminal liability.

The Securities and Exchange Commission rule requires chief executives and chief financial officers of large companies to sign sworn statements by mid-August declaring that recent financial reports are accurate and complete.

Though companies always have been required to provide accurate data, the personal declarations could ratchet up executives' legal liability if errors--honest or otherwise--turn up later.

That has prompted CEOs to take such steps as rechecking accounting procedures, boosting personal liability insurance and forcing subordinates to sign similar statements under oath, experts say.

"Some people are saying, 'Oh my Lord, what does this mean? What should I do?' " said David Becker, a former SEC lawyer now at Cleary Gottlieb Steen & Hamilton in New York. Some executives feel as if they're "in the cross-hairs," he said.

The new rule could further roil the stock market in the next few weeks. Federal Reserve Chairman Alan Greenspan and others have predicted that some CEOs, as they review their books, will be forced to restate past financial results.

Executives' increased legal vulnerability also could have broader implications longer term, some experts say.

At an extreme, it could discourage qualified people from becoming CEOs or CFOs.

"At some point, you rack up the liability so high that you don't get good people" to take these jobs, said Seth Taube, a securities lawyer at McCarter & English in Newark, N.J.

The SEC enacted the rule June 28 following the wave of corporate accounting scandals that began with Enron Corp.'s collapse in December.

CEOs and CFOs must sign an SEC-scripted statement in which they declare "to the best of [their] knowledge" that their financial reports are correct.

Executives could avoid signing by telling the SEC why they can't make such an assurance. But few CEOs are expected to take that route because it would raise doubts about their company's accounting and almost certainly crush their stock.

The rule affects 947 publicly traded companies with annual revenue exceeding $1.2 billion. The forms for many companies, though not all, are due Aug. 14. The deadline depends on which fiscal periods a company uses for its financial reporting.

The sworn statements will apply to the 2001 annual reports that each company already has filed, as well as to quarterly data released so far this year. The SEC has proposed making the rule permanent.

The SEC realizes that chiefs of huge companies can't verify the accuracy of every financial detail, experts say. But regulators want to force them to pay closer attention to the way their staffs compile and report numbers.

One goal of the SEC rule also is to prevent CEOs from using what has recently been a common defense when companies' accounting has been exposed as troubled or fraudulent: that the CEO relied on subordinates and was unaware of the financial minutiae.

Some executives say they welcome the new rule.

On Wednesday, Delphi Corp., a Troy, Mich.-based auto-parts maker, became the first company to file the certifications.

J.T. Battenberg III, Delphi's CEO, said he stands behind his company's financial statements and believes the SEC rule will allow executives to send a clear message that most companies have used proper accounting.

"We've got to do whatever we've got to do to protect our companies and our people" amid the cloud of mistrust hanging over corporate America, he said.

Before filing the certifications, Battenberg held meetings with the audit committee of Delphi's board of directors and with the company's outside auditors to ensure the accuracy of the financial reports, he said.

Delphi also required the chiefs and CFOs of its seven divisions to sign similar statements, Battenberg said.

However, executives at some companies are unnerved by the unknown legal ramifications of personally certifying the financial results, experts say.

"CEOs are nervous because they don't know what [will happen] if someone three levels below them makes a mistake," Taube said.

Some experts predict that many CEOs will do what Battenberg did and require similar sworn statements from subordinates, figuring they could be used as a defense if accounting problems are exposed later.

Executives could face heightened legal exposure in two ways. First, a signed declaration makes it easier for prosecutors to bring criminal charges, especially for perjury.

Also, CEOs could face an increased threat of civil litigation from regulators or from aggrieved investors.

Some executives have sought to limit their liability by asking for permission to modify the wording of the certifications they file. The SEC has balked at the idea.

"We are dismayed that respected members of the bar seem to be spending a great deal of effort in searching for a way to advise CEOs and CFOs on how to weasel out of complying with the clear intent of the order," said Martin P. Dunn, deputy director of the SEC's corporation-finance division in Washington.

The agency said it will make the declarations public on its Web site (http://www.sec.gov) soon after they're turned in. Companies that file the statements according to the SEC's specifications will be grouped in one category. Those that don't will be batched in a second category where their lack of compliance would be readily apparent to investors.

CEOs normally are protected from personal legal liability by so-called directors and officers insurance, which their companies buy for them.

The insurance pays executives' legal bills and any settlements or judgments if they are shown to have been negligent. It does not cover fraud, however.

D&O insurance coverage is likely to include the risks created by the new certifications, some experts say.

But if damages exceed the value of the policies, or if companies go bankrupt, executives still could face personal liability.

For that reason, many companies have been trying to ramp up their insurance coverage--one reason D&O premiums have been rapidly escalating.

D&O premiums for large companies have surged by 100% to 600% this year over last year, said John Keogh, president of the D&O unit of giant insurer American International Group in New York, which dominates the D&O market.

(7/10/02) - Aides describing the President's outrage over CEO behavior say Bush feels "betrayed by his class." If so, one thing is certain: It's the first time he's had cause to feel this way.

Bush's muscular new piety on corporate ethics means the press has the hook it needs to reexamine his cozy Texas business history. And that means we may finally get beyond fawning accounts of Bush's first-president-with-an-MBA-management style to reminders that, among other remarkable facts, Bush is the first president to have been investigated by the Securities and Exchange Commission for insider trading, and that Bush seems to have received an unusual $12 million gift while governor of Texas that accounts for his fortune.

Now, before everyone starts screaming, "How dare you sully the name of our commander in chief with some dirty, low-down truth-telling," let's be clear. Bush is putting this issue in play of his own volition. Or, more precisely, because his pollsters tell him that not getting out front here is a certain risk, whereas the chance the press will broadcast damning facts from Bush's business past is less certain.

In any event, intimidating reporters into backing off negative stories about the boss is a war this White House knows how to fight. The day-one strategy, after Paul Krugman launched the first salvo in his New York Times column, was for Bush to say dismissively: "It's been fully vetted." This Krugman-to-reporters-to-Bush exchange made page A12 in the Times and A4 in the Washington Post.

A start, yes - but not nearly good enough!

News outlets inclined to say, "We looked into that during the campaign" have to acknowledge that we're in a new era. After Enron, Worldcom, Tyco, Arthur Andersen and countless earnings restatements, it's clear that facts about Bush given a once-over in the heat of a campaign may not pass the smell test in this transformed climate. And that's before we get to all those new facts waiting to be discovered now that business behavior really matters.

A good place to start is Joe Conason's underappreciated February 2000 piece in Harper's magazine, in which Conason tells a true Texas version of How To Succeed In Business Without Really Trying. Among the disturbing highlights:

The "investigation" of Bush's fortuitous dumping of Harken Energy stock in 1990 was conducted by an SEC headed by a pal of Bush's father that dad appointed to his job. The SEC's general counsel then was the Texas attorney who had handled the sale of the Texas Rangers for George W. Bush and his partners in 1989. In the third world, given such circumstances, we'd say the fix was in. Anyone for an independent look this time?

When the Texas Rangers were sold in 1998, while Bush was governor, his partners, Conason reports, "fattened his payout six times over by awarding him additional shares in the team at the time of the sale that brought his 1.8 percent share up to 12 percent." This boosted Bush's return on a borrowed $600,000 investment from about $2.5 million to $15 million. Anyone think it's time to better understand what that was all about?

If Democrats who'd made fortunes from Bush-like patterns of crony capitalism were in the White House during a crisis of corporate integrity, does anyone doubt that Richard Scaife would have scrambled the jets months ago and bankrolled mountains of American Spectator exposes?

Luckily, this area of inquiry is all so legitimate - no sex, no trumped up lawsuits, no Linda Tripp - that the media can do it all by themselves!

And do it they must. Beyond the importance of knowing whether these and other deals crossed the line, Bush's business history underscores the massive hypocrisy of his avowed public philosophy. How dare this man preach "self-reliance" and "personal responsibility," how dare he rail against "dependence on government," when his fortune was won via a gift from rich pals as payback for persuading Texas taxpayers to approve a sweetheart stadium deal for the Rangers.

Over to you, New York Times. Take it away, James Carville.

Matt Miller is a senior fellow at Occidental College in Los Angeles.

(7/20/02) - Wagging the dog no longer cuts it. If the Bush administration wants to distract Americans from watching their 401(k)'s go down the toilet, it will have to unleash the whole kennel.

Maybe only unilateral annihilation of the entire axis of evil will do. Though the fate of John Walker Lindh was once a national obsession, its resolution couldn't knock Wall Street from the top of the evening news this week. Neither could the president's White House lawn rollout of his homeland security master plan. When John Ashcroft, in full quiver, told Congress that the country was dotted with Al Qaeda sleeper cells "waiting to strike again," he commanded less media attention than Ted Williams's corpse.

What riveted Americans instead was the spectacle of numbers tumbling as the president gave two speeches telling us help was on the way. For his first pitch, he appeared against a blue background emblazoned with the repeated legend "Corporate Responsibility." Next came a red backdrop, with "Strengthening Our Economy" as the double-vision-inducing slogan. What will be strike three — black-and-white stripes and "Dick Cheney Is Not a Crook"? Maybe this rah-rah technique helped boost the numbers back when George W. Bush was head cheerleader in prep school. But he's not at Andover anymore. Where his father's rhetoric gave us a thousand points of light, his lopped a thousand points off the Dow.

Once the market dissed him, the president waxed philosophical, if not Aristotelian, professing shock that his fellow citizens would care about something as base as money. Invoking Sept. 11, he said, "I believe people have taken a step back and asked, `What's important in life?' You know, the bottom line and this corporate America stuff, is that important? Or is serving your neighbor, loving your neighbor like you'd like to be loved yourself?"

Easy for him to say. It's hard to engage in lofty meditation about loving your neighbor if your neighbor is Kenneth Lay or Gary Winnick or Bernard Ebbers or any other insider in "corporate America stuff" who escaped with multimillions just before the corporation cratered, taking your job or pension or both with it.

Democrats celebrate the Republicans' travails as if it were Christmas in July. But the party's chief, Terry McAuliffe, was a Winnick crony who made his own killing before Global Crossing tanked, and its most visible presidential candidate, Joseph Lieberman, is fighting to the political death for loosey-goosey stock-option accounting. Just as the Harken-Halliburton stories gathered fuel, such tribunes of the people as Tom Daschle, Hillary Rodham Clinton and John Kerry boarded corporate jets supplied by companies like Eli Lilly and BellSouth to rendezvous in Nantucket with their favor-seeking fat cats.

But the hypocrisies of the Democrats, however sleazy in their own right, do not cancel out the burgeoning questions about this White House. Each time Mr. Bush protests that only a few bad apples ail corporate America, that mutant orchard inches closer to the Rose Garden. If there's not a systemic problem in American business, there does seem to be one in the administration, and it cannot be cordoned off from the rest of its official behavior. Compartmentalization, Republicans of all people should know, went out of style with the Clinton administration.

In the real world, everything connects. What is most revealing about Mr. Bush's much-touted antidote to the bad apples, his "financial crimes SWAT team," is how closely it mimics Enron's Cayman Island shell subsidiaries. It exists mainly on paper, as a cutely named entity with no real assets. It calls for no new employees or funds and won't even gain new F.B.I. agents to replace those whom the bureau reassigned from white-collar crime to counterterrorism after Sept. 11.

The SWAT team's main purpose is to bolster the administration's poll numbers as the Enron off-the-books partnerships did its corporate parent's stock price. And like its prototypes, it may already be going south. No sooner did the SWAT team's chief, Deputy Attorney General Larry Thompson, hold his first photo op than The Washington Post revealed that he was an alumnus of yet another bad apple, the credit-card giant Providian. Mr. Thompson had headed the board's audit and compliance committee and escaped with $5 million before the company threw thousands of employees out of work and paid more than $400 million to settle allegations of consumer and securities fraud.

Even the war on terrorism is not immune from Enron-style governance by this administration. Last weekend Jeff Gerth and Don Van Natta reported in The Times that the Halliburton unit KBR got a unique sweetheart deal with the Army last December, despite being a reputed bill-padder and the target of a criminal investigation. Why? Call it the perfect Halliburton-Enron storm. The company grabbing the deal is the former employer of the vice president. The government agency granting the deal, the Army, reports to the former Enron executive Thomas White, who is nothing if not consistent: he doesn't protect taxpayers' dollars any more zealously than he did his former shareholders'.

We still don't know the full extent of our Enron governance because we still don't have a complete list of former Enron employees hired by the Bush administration. (It hardly inspires confidence to know that one of them is its chief economic adviser, Lawrence Lindsey, who also offered such valuable wisdom to Ken Lay.) Nor, of course, do we know the full details of the president's past history at Harken Energy or the vice president's at Halliburton. Those details matter not so much because of any criminality they might reveal — we are rapidly learning that there is no such thing as a prosecutable corporate crime anyway — but because of what they may add to our knowledge of the ethics, policies and personnel of a secretive administration to which we've entrusted both our domestic and economic security.

What we know about Harken so far is largely due to the S.E.C. documents unearthed and posted since 2000 by the enterprising and nonpartisan Center for Public Integrity, also a leader in uncovering the Clinton administration's Lincoln Bedroom scandals. "It's Forrest Gump does finance," says Charles Lewis, the center's founder, in looking at the story line of the remarkable George W. Bush business career. "Every time he seemed to be in trouble, he would end up with a box of chocolates."

The president's self-contradictory defense of his past is to say he was "fully vetted" by the S.E.C. even though he still hasn't "figured it out completely" himself. But the S.E.C. never interviewed Mr. Bush during its investigation. The agency was then run by an appointee of his father, Richard Breeden, who recused himself from the case. Last Sunday, Mr. Breeden turned up on Fox News as a George W. defender. Yet when Tony Snow asked him twice if he could give the president "a clean bill of health, yes or no," Mr. Breeden pleaded ignorance and ducked. Perhaps that's why the White House has not asked the S.E.C. to release its Harken papers, even though Harvey Pitt last weekend said he would if it did. The president has also told the press that "you need to look back on the director's minutes" to answer questions about Harken — and then refused to provide those minutes or to instruct Harken to release them either. But yesterday Mr. Lewis's organization posted a pile of them at www.publicintegrity.org, and says that more documents are yet to come.

What is the president hiding? Clearly the story here is not merely a hard-to-prove case of insider trading, tardy stock-sale forms and Mr. Bush's knowledge of the sham transaction involving Aloha Petroleum. Most likely it also involves the mystery first raised by The Wall Street Journal and Time in 1991. Back then, their investigative journalists tried to break the cronyism code by which tiny Harken, which had never drilled a well overseas, miraculously beat out the giant Amoco for a prized contract for drilling in Bahrain. They also tried to learn what various Saudi money men, some tied to the terrorist-sponsoring Bank of Credit and Commerce International, may have had to do with Harken while the then-president's son was in proximity.

These questions, like the companion questions about Halliburton's dealings with Iraq on Mr. Cheney's watch, are not ancient history but will gain in relevance in direct proportion to the expansion of the war on terrorism and the decline of the Dow. Sooner or later George W. Bush will have to answer them, because even though he cares more about loving his neighbors than the bottom line, the rest of us are just irredeemably crass.

(7/20/02) - Two mysteries remain on President Bush's past business practices. Together they raise an even deeper question that will haunt us until November 2004.

The first mystery is: Who is the unnamed "institutional investor" who came out of nowhere, unbidden, to buy Bush's shares of Harken Energy in 1990?

Recall that Bush sold his Harken stock for $848,560 on June 22 of that year. This gave Bush the cash to repay the loan he took out to invest in the Texas Rangers.

What we know so far is that a Los Angeles broker named Ralph Smith cold-called a few Harken shareholders, saying he had an institutional client who wanted to buy a big block of shares. The buyer has never been named, and Smith says he has an obligation of confidentiality to his client. Smith also insists it was a standard trade and the buyer has nothing to do with Bush or his family.

I'm sure Smith would like America to take his word for it, but the client can easily waive this confidentiality and clear up any doubts. The only reasons for the mystery buyer not to come forward are (1) a desire to stay out of the limelight, which is perfectly understandable, and (2) because we might conclude Smith is wrong, and that there was something fishy about this buyer happening to show up at the perfect moment for a president's son.

It would be a pity to expose this buyer to the media glare if the transaction were innocent, but that risk is foreseeable when one buys a president's son's stock in such circumstances. The press should urge this client to come forward and investigate its identity if it won't.

Mystery Two concerns the President's role in the bogus Aloha transaction that led the Securities and Exchange Commission to force Harken to restate its earnings. It is this transaction that raises the question of whether Bush was complicit in Enron-style accounting games to mask huge losses.

Bush says we need to look at the corporate minutes. Harken won't release them. And the White House won't ask Harken to do so (it won't ask the SEC to release its file on the President either).

Bush appears damned either way. Either the President blessed these moves as a member of Harken's audit committee, which looks pretty bad - or he didn't know or understand what was happening, in which case he hardly looks like the engaged director he now insists is needed to restore trust in corporate America.

Is it fair to look at these old transactions - as well as at the cozy Rangers deal through which Bush turned $500,000 into $15 million? I posed that question to David Frum, a former top Bush aide, on Left, Right & Center, the weekly public radio show we do (with Arianna Huffington and Robert Scheer).

"It's perfectly legitimate," Frum replied, before adding quickly that when these matters have been rehashed repeatedly - in campaigns in 1994, 1998 and 2000 - you have to lay them to rest. And poring over the sweetheart Rangers deal, Frum insists, is illegitimate. "If you're going to say, 'I'm not impressed with the resume of George Bush'... that really is the thing that elections are all about." His point: Everyone understood the strengths and weaknesses of Bush's background, and...

And there's the rub! Ordinarily I'd say Frum was right - when we know the facts and voters decide, it's behind us. But that brings us back to the real elephant in the room: Half the country isn't convinced Bush won the 2000 election. If we're honest, we have to admit we're operating in a surreal moment in history - in which a terrorist threat must be faced down by a President of dubious legitimacy, whose background also renders him particularly ill-suited to stem the simultaneous crisis of crony capitalism.

It's a testament to American pragmatism that we can muddle through in this bizarre situation until 2004, when (God willing) there won't be another cliff-hanger. But the bitterness spawned by the last election - though submerged by crisis - will not go away.

Like it or not, it is precisely because a clean verdict on Bush was never rendered by the people that scrutiny of his past remains legitimate in assessing his fitness to lead today.