Just Bad Apples? Or Bad Trees?

In a speech Tuesday on a "new ethic of corporate responsibility," President Bush placed most of the blame for fallen giants like Enron on a small number of executives who enriched themselves while hiding behind false numbers.

By focusing on personal misdeeds rather than market structures, the MBA president avoids asking Congress for new laws that would alter the New Economy or push federal agencies to do much more than beef up enforcement. Indeed, he expressed more faith in private moves by the stock exchanges to fix corporate governance.

As a politician trying to win total Republican control of Congress this fall, Mr. Bush's speech may work to show he's doing something to help restore public confidence in financial markets.

But as a leader, he was careful to avoid pushing strong measures that would imply deep problems in a free enterprise system just going through a post-exuberance shakeout.

In other words, his speech was more pulpit than punch.

Many post-scandals corrections are already taking place, either within companies, or under new rules from the Securities and Exchange Commission issued in the past few months.

The toughest step proposed by the president is to double the maximum prison sentence for corporate fraud to 10 years. the stiffer penalty may feel good to a public angry at executives who sank the savings of thousands of employees and investors. But its deterrence value is still uncertain.

Bush appealed to the conscience and character of executives. But he's also counting heavily on expanding the SEC to guide companies toward better protection of investors, pensions, and jobs. That means altering corporate power structures, more and quicker transparency by companies, and more scrutiny of CEO compensation packages.

If financial markets rebound by election time, Bush will be proved right. If not, he'll need a lesson in taking responsibility for bad leadership.