"We know that this has become a political problem," said Senate Banking Committee Ranking Member Sen. Phil Gramm, R-Texas.
Democrats highlighted ties between the GOP and big business to buttress their plans for new government rules to break the cozy relationship between companies and the accounting firms responsible for auditing their books -- and sometimes working as consultants for the companies at the same time.
Republicans warned that a knee-jerk political cure to the accounting crisis might strangle companies with more regulations, but said corporate managers who do deliberately mislead investors should be thrown in jail under new, stiff penalties.
The political shadowboxing took place in the wake of news last month that WorldCom Inc. had overstated its cash flow by almost $4 billion. President Bush is set to deliver a speech Tuesday in New York where he will lay out his own plan for addressing the burgeoning corporate scandals.
The House Financial Services Committee hauled a series of former WorldCom officials to Capitol Hill Monday for a hearing on the crisis.
Committee Chairman Mike Oxley, R-Ohio, called the WorldCom scandal "another example of the decline of ethics in American culture during the 1990s."
"The consequences to this sort of criminal activity, should it be proved, should be severe, and it may mean time in federal prison."
Committee Ranking Member John LaFalce, D-N.Y., said, "There is an urgent need for strong and reasoned legislation to restore the market confidence that has been squandered by greed, incompetence, fraud and weak regulation.
"I look forward to President Bush's speech tomorrow, where I hope after a year and a half he will finally join with us in trying to effectuate these reforms."
The Senate this week is considering a bill by Senate Banking Committee Chairman Paul Sarbanes, D-Md., to create an independent regulatory board to oversee accounting. It would also bar the firms from also acting as consultants for the same companies.
Some Republicans Monday admitted their efforts to change that bill on the Senate floor might be in vain in the face of the WorldCom news.
"It is clear that there is an attitude in this Congress that we need to do something even if it is wrong," Gramm said.
The House has already passed an accounting overhaul bill, assailed by consumer groups, that would set up a board to oversee accounting firms that would be made up of accountants.
A recent CNN/USA Today/Gallup poll, conducted June 28-30, put Bush's overall approval rating at a healthy 76 percent, up six points from the beginning of the month. It also showed that more than six in 10 Americans say that big business has too much influence on the president and separately on Democrats in Congress. More than seven in 10 say that big business' influence is too great on Republicans in Congress.
Consumer groups warned that opponents of the Senate accounting industry overhaul bill would have plenty of chances to water down or kill it when it is combined with the House version behind closed doors.
According to the Center for Responsive Politics, the biggest accounting firms and their trade association, the American Institute of CPAs, contributed nearly $39 million in individual, political action committee and soft money contributions from 1989 through 2001.
"You are going to get a lot of window dressing and we are concerned we are not going to get a lot of reform," said Mark Cooper, director of research at the Consumer Federation of America.
Lobbyists for big accounting firms Monday were quietly shopping around a series of amendments designed to take the bite out of the Senate bill, according to supporters of the legislation.
The amendments would:
-- Lower penalties for violating the ban on consulting for companies;
-- Alter a requirement that a company's board of directors approve of any other services accounting firms wish to provide;
-- Lower the bar for accounting discrepancies that should go before the board of directors for review;
-- Eliminate the audit oversight board called for in the Sarbanes bill
-- Delete a requirement that accountants produce a new written report on their activities to validate a firm's own accounting practices;
-- Prohibit any suit against an accounting company from using information assembled by a board of directors of an audited company.
In a late afternoon news conference, Bush called on the Senate to move legislation to help improve consumer confidence in U.S. markets, but emphasized penalties on bad corporate officers. "We'll vigorously pursue people who break the law," Bush said. "And that's what -- and I think that'll help restore confidence to the American people."
Notable deaths of 2014 [PHOTOS]