Congress took an important step forward on financial reform July 25 when the Senate voted 99-0 and the House 423-3 to pass reconciled legislation strengthening corporate accountability and toughening penalties for corporate lawbreakers.

In a first-step victory for working families' retirement security, the deal closely tracks the Senate bill sponsored by Sen. Paul Sarbanes (D-Md.) and endorsed by the AFL-CIO. It includes reforms aimed at ensuring the financial independence of corporate directors and Wall Street analysts. It creates a special oversight committee to enforce accounting industry changes including a provision barring accounting firms from providing many consulting services to the same publicly traded companies they audit. And it stiffens criminal penalties associated with corporate crimes and includes new and tougher penalties for shredding and destroying evidence of wrongdoing.

Now the bill goes to the president for his signature. Before revelation of WorldCom's $3.9 billion accounting scandal and its subsequent bankruptcy, the Bush White House supported a weaker House version passed in April. As the stock market rapidly declined in mid-July and the Bush administration's plan came under attack, the administration retreated from its opposition to authentic corporate accountability reform and indicated the president would sign any reconciled bill Congress puts on his desk before legislators adjourn for summer recess.

But the "battle to transform all the lessons of Enron, Arthur Andersen and WorldCom into genuine improvements for workers is far from over," said AFL-CIO President John Sweeney. Recent corporate collapses have wiped out billions in accumulated savings of more than 100,000 workers who depend on largely regulated retirement plans known as 401(k)s. Although 401(k)s can never replace the guaranteed and insured benefits of traditional pensions, the 26 million U.S. workers who have no other retirement plans to depend on have yet to receive meaningful protection from the Senate or House.

A so-called retirement security bill passed by the House in April not only falls short of meaningful reform, according to Sweeney, but also eliminates protections against workers receiving conflicted investment advice and allows companies to exclude even more workers from 401(k) and pension plans. And notably absent, he says, are provisions that give workers a voice in running their 401(k) plans, counterbalance employer efforts to seduce workers into buying dangerously high levels of company stock, give workers a right to sue company officials and outside advisors when their misconduct causes losses to workers' 401(k) accounts and give workers a right to information critical to making the best decision about their retirement investments.

The AFL-CIO supports the retirement security bill S. 1992, introduced by Sen. Edward Kennedy (D-Mass.).