Consumers Union • Consumer Federation of America • U.S. Public Interest Research Group

Consumer Groups: House Enron-Accounting Reform Bill Likely To Fall Short: House Financial Committee Expected To Finish Bill Tuesday

WASHINGTON, DC -- The House Financial Services Committee is expected to approve an Enron-related bill (HR 3763) aimed at the oversight of the accounting profession when the committee meets Tuesday to finish the legislation.

Last week, the committee rejected several pro-consumer amendments to the bill. Consumer groups today said the chances that the final bill would be adequate were slim.

"It seems likely that this bill is going to fall short of making real changes in the way the accounting industry does business," said Frank Torres, Legislative Director for Consumers Union. "In fact, it could wind up being a big victory for the special interests that are trying to keep Congress from cleaning up the system following Enron. Under this bill, Enron executives would be able to keep their money, accounting conflicts of interest would remain, and there would still be major legal hurdles for individual investors looking to hold the industry accountable for its wrongdoing. And there is no guarantee that the oversight board created by this bill would have a clear mandate to make the necessary changes," Torres said.

Barbara Roper, Consumer Federation of America's Director of Investor Protection, said the committee must strengthen the bill if it wants to avoid an Enron repeat. "This bill fails the two key tests of effective accounting reform: it does not ensure the independence of the audit, and it does not ensure that the new regulator it creates will be free from domination by the accounting industry. Unless the committee adopts significant strengthening amendments, as it has so far been unwilling to do, this bill offers no basis for renewed investor confidence in the reliability of corporate disclosures," Roper said.

Ed Mierzwinski, Consumer Program Director of the U.S. Public Interest Research Group (PIRG), cited a front-page story in today's Wall Street Journal as the latest example of why the committee needs to improve its bill. "Shocking new information and videotapes reported on today by the Wall Street Journal, which the paper said painted Andersen as "virtually an arm of Enron," demonstrate clearly that strengthening amendments to the weak committee package are needed if Congress is really trying to prevent future Enrons and not just wringing its hands," Mierzwinski said.

Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition and other consumer concerns. Since 1936, our mission has been to test products, inform the public and protect consumers.

Consumer Federation of America is a non-profit association of almost 300 groups, with a combined membership of over 50 million people. CFA was founded in 1968 to advance consumers' interests through advocacy and education.

U. S. PIRG serves as the national lobbying office for state Public Interest Research Groups. PIRGs are non-profit, non-partisan consumer, environmental and good government research and advocacy organizations with members around the country.

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