Of what Arthur Andersen is guilty, in addition to shredding documents and incredibly poor judgment, will be determined in the next few weeks and months. More immediately, the accounting industry, the investment industry and concerned members of Congress want to make sure Americans have confidence in the system that depends on people investing their life savings in companies with the hope of someday being rewarded for their trust in strangers. A noble desire, certainly, and one that Congress can do something about by revisiting the 1995 law that helped make securities fraud so much less risky.

The 1995 law, called the Private Securities Litigation Reform Act, was part of Speaker Newt Gingrich’s Contract with America and was passed over the veto of President Bill Clinton. It was supposed to end frivolous litigation, but naturally it did more than just that. For instance, it weakened the “safe harbor” standard that encouraged companies to include meaningful cautionary statements in their projections of earnings. It reduced damages for deliberate fraud under racketeering law and limited joint and several liability that would hold auditors more fully accountable. It made pleading requirements more complicated. Sen. Olympia Snowe supported both the measure and the veto override; Rep. John Baldacci opposed both.

Its reform has returned in the form of two bills, HR 3818 – the Comprehensive Investor Protection Act -in the House and S. 1933 – Investor Protection Act of 2002 – in the Senate. Both bills require the Securities and Exchange Commission to tighten rules on announced earnings, return joint and several liability for accountants and restore the statute of limitations from three to five years. The Senate version would also lift the preemption on state investment-fraud laws. All reasonable proposals for restoring confidence.

Inevitably, there is a quiet but determined effort to kill both bills in committee. After the Arthur Andersen work for Enron, lobbyists know better than to run around yelling about suit-happy lawyers ruining America so the tactic this time is to recommend an alternative, far milder version of reform. The industry wants an oversight board that would make suggestions for reform. The plan may sound a bit pathetic, but it is an improvement over what was passed seven years ago and progress isn’t to be disparaged.

Still, the House and Senate versions of investor-protection reform are stronger and more thorough, returning needed rules to investments that are relied on more and more for retirement. Congress should conclude that the zeal of ’95 was misplaced and approve reform that restores confidence.