WASHINGTON — The business sector and the public have been looking to the government to help stem the tide of investor and consumer discontent, but actions taken Tuesday didn’t seem to change their outlook.
The White House held a half-day economic summit at Baylor University in Waco, Tex., with business officials, an event derided by Democrats as being political fluff. President Bush, on vacation at his nearby ranch in Crawford, brought his cabinet there to hear recommendations and concerns about the direction of the economy from eight panels.
There was no apparent criticism of the Bush administration’s approach to handling the dampened economy and there was no consensus as to what should be done to boost consumer confidence to increase spending and manufacturing.
Among recommendations voiced was the need for government-backed terrorism insurance to help spur construction of an estimated $8 billion backlog in malls and other commercial properties. An insurance bill is awaiting congressional action and Bush said he would sign it.
The President also made various pitches for his programs as economic stimuli, including more trade agreements.
“It’s essential we move aggressively because trade means jobs,” Bush said.
Back in Washington, the Federal Reserve signaled it won’t be lowering interest rates, already at a 40-year low. In a statement, the Fed said current rates “should be sufficient to foster an improving business climate over time.'”
Neither the Fed’s action nor Bush’s economic forum seemed to sway stock market fortunes.
After peaking to 8,745.52 in late morning trading, the Dow Jones Industrial Average retreated to close down 206.5 points, or 2.4 percent, at 8,482.39. However, buoyed by good earnings news from Wal-Mart, TJX and others, the Standard & Poor’s Retail Index ticked up 0.46 points, or 0.2 percent, to close at 266.98.
The tech-heavy Nasdaq also followed the Fed news down, losing 37.57, or 2.9 percent, to close at 1,269.27. The broader S&P 500 likewise dipped, falling 19.59 points, or 2.2 percent, to 884.21.
Meanwhile, chief executives from 947 companies, including several retail and apparel firms, begin to file new oaths with the Securities and Exchange Commission today as to the truthfulness of their second quarter earning reports.
The SEC in June asked ceo’s and chief financial officers of publicly held companies with annual revenues of more than $1.25 billion to make the pledge as part of the Bush administration’s push to instill investor confidence in the stock market in the wake of corporate scandals.
Companies with fiscal years following the calendar year must file their pledges of truthfulness today. Fashion industry firms with this deadline include Jones Apparel Group, Kellwood Co., Polo Ralph Lauren Corp., Sears Roebuck & Co. and Levi Strauss & Co. Levi’s isn’t a publicly traded company, but files financials with the SEC because of public debt. About 200 companies, including Sears, Burlington Industries, DuPont and The Gap, by deadline Tuesday had filed and none reported restated finances.
Corporations with fiscal years beginning in February — the next tier of firms affected, including several retailers, have until Sept. 17 to make their pledges. These companies include Abercrombie & Fitch, Ann Taylor, Dillard’s, Federated Department Stores, May Department Stores and Target Corp. Wal-Mart executives are scheduled to file their second-quarter report and oaths of truthfulness by Sept. 16.
Ceo’s and cfo’s are already required to certify the accuracy of their financial reports, but they aren’t held criminally accountable for potential mistakes.
The new pledge means “they now have to say it under penalty of perjury, which means there could be a criminal charge not just a regulatory fine,” said Mallory Duncan, vice president and general counsel of the National Retail Federation.
An SEC spokesman said there is no set amount of civil fines or punishment otherwise meted out by the agency and criminal penalties also run the gamut. However, a bill recently signed by President Bush calls for fines up to $5 million and maximum prison terms of 10 years for ceo’s and cfo’s who knowingly approve false financial statements. The bill will go into effect once the SEC approves regulations implementing it.