Asia stocks drop amid economic recovery doubts

Asian stocks markets dropped Thursday as the U.S. Federal Reserve failed to reassure investors that a lasting recovery in the global economy was taking hold.
The U.S. central bank decided Wednesday to keep a key interest rate at a record low and said cheap credit would continue for an "extended period" as the world's largest economy struggles to regain its footing after its worst downturn in decades.
For many investors, the news raised doubts about whether the turnaround under way in many economies was strong enough to extend a powerful eight-month rally in global markets. A key U.S. unemployment report due Friday, which could yield clues about the ailing U.S. consumer and demand for Asian exports, also kept traders on edge.
"Around these levels, it's hard to have conviction positions," said Jan Lambregts, head of research of Rabobank in Hong Kong. "There's a big question on investor confidence given issues about the sustainability of the global recovery once stimulus policies fade."
Japanese shares helped lead Asian stocks lower, with the Nikkei 225 stock average falling 95.16 points, or about 1 percent, to 9,749.15, as the strengthening yen undermined the competitiveness of the country's exports.
"The Japanese export sector is being killed by the yen, and I think yen strength is here for quite a while," Lambregts said.
South Korea's markets pulled back 1.6 percent to 1,554.87, while Hong Kong's Hang Seng was down 0.9 percent at 21,418.31 and India's market shed 1.2 percent. Markets in Indonesia, Singapore, Thailand and Australia also slid. Chinese shares, though, bucked the downward trend to gain modestly.
Among stocks, Japan's Nissan Motor Co. climbed over 1 percent after returning to a profit last quarter and predicting a narrower loss for the fiscal year with the help of stronger demand in China.
Wall Street traded largely sideways on Wednesday.
The Dow rose 17.53, or 0.3 percent, to 9,802.14. The broader Standard & Poor's 500 index rose 1.09, or 0.1 percent, to 1,046.50.
U.S. futures augured a lower open on Thursday. Dow futures shed 41 points, or 0.4 percent, to 9,744, while S&P futures lost 4.70, or 0.5 percent, to 1,042.30.
Oil prices fell in Asia, with benchmark crude for December delivery down 61 cents to $79.79 a barrel. The contract gained 80 cents overnight.
Gold, meanwhile, rose $1.6, or nearly 0.2 percent, to $1,088.90 an ounce.
The dollar slipped to 90.49 yen from 90.77 yen. The euro fell to $1.4844 from $1.4872

Toyota returns to profit in latest quarter

Toyota said Thursday it returned to a profit in the latest quarter as government incentives boosted sales, leading the world's largest automaker to trim its projected red ink for the year.

AP - Toyota vehicles are displayed at the D. Longo Toyota dealership in El Monte, Calif., Wednesday, Nov, 4, ...
Toyota Motor Corp. reported a 21.8 billion yen ($242 million) profit for the July-September period after three straight quarterly losses.
That marked an 84 percent plunge from the 139.8 billion profit racked up the same period a year ago, but underlined a gradual recovery for Toyota, which sank to its worst loss for the fiscal year ended March 31.
The news marked the latest in a series of recoveries for Japanese automakers. Rivals Honda Motor Co. and Nissan Motor Co. have both recently reported healthier earnings after taking a battering from the global economic crisis.
Toyota said it now expects to sell more vehicles for the fiscal year through March 2010, raising its projections to 7.03 million vehicles from 6.6 million.
The company, which makes the Prius hybrid and the Corolla subcompact, said sales in the last six months were proving better than earlier expectations as government stimulus measures around the world spur sales.
As a result, the company forecasts a smaller loss for the fiscal year of 200 billion yen ($2.2 billion) -- much better than the 450 billion yen ($5 billion) of red ink it had predicted earlier.
If Toyota can manage the latest forecast, it would be major improvement over the 437 billion yen loss it posted during its last fiscal year, the worst performance in the company's 72-year history.
For the latest quarter, Toyota recorded 4.542 trillion yen ($50 billion) in July-September sales, down 24 percent from the same period a year earlier.
Despite the results, Toyota is still struggling.
In a tearful news conference Wednesday, Toyota pulled out of expensive but glamorous Formula One racing, acknowledging it has to focus on its core car business.
Meanwhile, the company faces an investigation by American authorities into problem floor mats, suspected of jamming the gas pedal and possibly causing crashes. A recall would affect 3.8 million vehicles, including the top-selling Camry sedan, and is already endangering Toyota's pristine reputation for quality.
On the bright side, Toyota is benefiting from strong sales in China and other emerging markets, although that has yet to offset completely flagging sales in the key North American market.
Demand is also surging in Japan for its Prius hybrid, which is tax free because of a government stimulus measure that saves the buyer thousands of dollars (tens of thousands of yen).

House Dems in final push on health care

The House is steaming toward a historic vote on President Barack Obama's remake of the U.S. health care system, with Democratic leaders increasingly confident and the powerful seniors' lobby AARP about to get on board.

AP - Rep. Steve Scalise, R-La., center, holds a copy of the health care bill during a news conference on ...
A debate and vote are expected Saturday on the 10-year, $1.2 trillion bill that would extend coverage to 96 percent of Americans, require employers to insure their employees and bar such insurance company practices as dropping coverage for sick people.
Democratic leaders shrugged off Tuesday's election losses in governor's races in Virginia and New Jersey, focusing instead on their wins in two House races, a Democratic seat in northern California and one in New York that had long been held by the GOP. Both winners will be sworn in ahead of Saturday's vote.
Leaders stopped short Wednesday of declaring they had the 218 votes needed to pass the bill, and they were still negotiating language on abortion and immigration. But scheduling the vote meant those issues would have to be resolved and undecided lawmakers would have to declare themselves.
"It is human nature to sort of keep discussing until decision time is at hand," Majority Leader Steny Hoyer, D-Md., said after meeting with second-year lawmakers Wednesday evening. "Decision time is upon us."
Said House Speaker Nancy Pelosi, D-Calif.: "We are on our path. We're very excited."
Action is slower on the other side of the Capitol, where senators are awaiting an analysis from the Congressional Budget Office on legislation written by Senate Majority Leader Harry Reid and others. The timeline there appears likely to spill into next year.
The House effort is getting a big boost from the AARP, which was set to endorse the bill, something that proved a crucial stamp of approval when then-President George W. Bush pushed the Medicare prescription drug benefit through a closely divided Congress in 2003.
Officials with knowledge of the group's decision disclosed it ahead of Thursday's scheduled announcement, speaking on condition of anonymity because it was not yet official.
If the AARP's clout doesn't close the deal for House Democrats, Obama is expected to try to do it himself with a visit to Capitol Hill on Friday.
With no Republican backing for the measure, Democrats will need overwhelming support from their own. A festering intraparty disagreement over how to prevent federal funds from being used to pay for abortion has not yet been entirely resolved, though language being circulated by one anti-abortion Democrat, Rep. Brad Ellsworth of Indiana, was getting interest from House leaders Wednesday.
Ellsworth's language would strengthen stipulations already in the bill against federal money being used to pay for abortions but still would allow people to pay for abortion coverage with their own money. That distinction doesn't satisfy the most ardent anti-abortion groups, which dismiss it as an accounting gimmick since the same insurance companies paying for abortions might also be getting federal money for other coverage plans.
The National Right to Life Committee issued a blistering press release Wednesday night calling Ellsworth's proposal "a political fig leaf made out of cellophane."
Ellsworth said that didn't bother him.
"I know what's in my heart, I know what's in my head and I think the big guy upstairs knows," Ellsworth said. He said that if his language is adopted he could "rest assured that no public dollars are going to fund abortions."
House leaders are also still grappling with illegal immigration, specifically whether illegal immigrants -- who would be barred from getting federal subsidies -- should be able to purchase insurance coverage within new government "exchanges" using their own money.
The White House does not want this allowed, but some members of the Congressional Hispanic Caucus and other Democrats view that position as too extreme. Caucus officials were scheduled to meet with Obama at the White House on Thursday.
The House bill would provide government subsidies beginning in 2013 to extend coverage to millions who now lack it. Self-employed people and small businesses could buy coverage through the new exchanges, either from a private insurer or a new government plan that would compete. All the plans sold through the exchange would have to follow basic consumer protection rules.
Seniors in traditional Medicare would get improved preventive benefits. Also, the prescription coverage gap known as the "doughnut hole" would be gradually closed. However, seniors signed up for private insurance plans through Medicare could lose some benefits, as the bill scales back extra payments that the plans have been getting.
In addition to raising money by cutting payments to hospitals and other medical providers, the House bill boosts taxes on upper-income earners.
Meanwhile, the CBO released an analysis of the House GOP bill that found it would reduce the number of uninsured by just 3 million in 2019. By comparison, the more expansive Democratic bill would gain coverage for 36 million.
While the Democrats' bill would cover 96 percent of eligible Americans, the Republican alternative would cover 83 percent -- roughly comparable to current levels. The budget office said the Republican plan would reduce federal deficits by $68 billion over the 10-year period and push down premiums for privately insured people.

'Clunker' data show pickup-for-pickup trades

Billed as a way for the government to put more fuel-efficient vehicles on highways, the $3 billion Cash for Clunkers program sold thousands of commuter-friendly cars, even hybrids, and more: Turns out, the most common deals replaced old Ford or Chevrolet pickups with new ones that got only marginally better gas mileage, according to an analysis of new federal data by The Associated Press.

AP - FILE - In this Aug. 23, 2009 file photo, an old pickup truck is displayed outside a car ...
The single most common swap -- which occurred more than 8,200 times -- involved Ford F150 pickup owners who took advantage of a government rebate to trade their old trucks for new Ford F150s. They were 17 times more likely to buy a new F150 than, say, a Toyota Prius. The fuel economy for the new trucks ranged from 15 mpg to 17 mpg based on engine size and other factors, an improvement of just 1 mpg to 3 mpg over the clunkers.
Owners of thousands more large, old Chevrolet and Dodge pickups bought new Silverado and Ram trucks, also with only barely improved mileage in the middle teens, according to AP's analysis of sales of $15.2 billion worth of vehicles at nearly 19,000 car dealerships in every state. Those deals helped the Ford F150 and Chevy Silverado -- along with Ford's Escape midsize SUV -- climb into the Top 10 most-popular vehicles purchased with the government rebates. The most common truck-for-truck and truck-for-SUV deals totaled at least $911 million.
In scores of deals, the government reported spending a total of $562,500 in rebates for new cars and trucks that got worse or the same mileage as the trade-ins -- in apparent violation of the program's requirements. The government said it is investigating those reports and said in some cases they were probably entered incorrectly by dealers or based on outdated fuel economy figures.
The National Highway Traffic Safety Administration is still reviewing the reports, and any dealers that submitted invalid trade-ins will be directed to return the government rebate, spokesman Eric Bolton said.
The new data, obtained by the AP under the Freedom of Information Act, include details of 677,081 clunker trade-ins processed by the government through Oct. 16. More than 95,000 of the new vehicles purchased under the program -- or about 1 in 7 -- got less than 20 mpg, according to the data.
The new figures, requested four months ago by the AP, represent the first substantial outside accounting of the clunkers program, lauded by the White House and the Transportation Department for improving fuel economy, stimulating sales and taking the dirtiest vehicles off the road. The data show the average fuel economy was 15.8 mpg for the old vehicles and 24.9 for the new ones.
The overall mileage increases over the clunker fleet represent a decline of 1.87 million tons of carbon dioxide per year, based on families driving an average of 12,000 miles, a yearly savings equivalent to the amount of carbon dioxide spewed in the U.S. in just 2.5 hours.
But plenty of consumers bought relatively low-mileage trucks and SUVs with the help of government checks.
"If we're looking for the environmental story here, we're going to be disappointed," said Jeremy Anwyl, chief executive at Edmunds.com, an analyst firm. "It might have started out from the perspective of improving the environment, but it got detoured as a way to stimulate the economy."
Popular high-mileage commuter cars, including the Toyota Corolla, Honda Civic, Toyota Camry and Ford Focus, also were among the Top 10 most popular new vehicles bought under the four-week program, with 105,280 of those models sold for a total of about $2 billion.
Bolton, the NHTSA spokesman, said the program "proved to be a win for the economy and the environment" because it helped financially struggling dealerships and auto manufacturers, and because, under the program's rules, clunkers necessarily were replaced with vehicles that got better mileage.
Chris Moss of Smithtown, N.Y., traded in his 1992 white Ford F150 pickup -- "it had 5 million miles on it and needed $50,000 in repairs, if you know what I mean" -- for a new Chevrolet Malibu hybrid for his wife. When he drove his old truck to the dealership's back lot with the rest of the clunkers, "90 percent of what you saw were old 150s and Explorers," he said. Moss posted a video on YouTube of his old truck's final day, called "Rust In Peace."
The $3 billion program, known officially as the Car Allowance Rebate System, ran from July 27 to Aug. 25 and generally required that new vehicles get better mileage -- at least 22 mpg for cars and either 15 mpg or 18 mpg for trucks, depending on class -- and that trade-ins get no more than 18 mpg. The trade-ins were required to be destroyed in exchange for either $3,500 or $4,500 rebates.
Some deals raise eyebrows:
-- In at least 145 cases, mostly involving trucks, the government reported consumers traded old vehicles that got better than or the same mileage as the new vehicle they purchased. The government said it was continuing to investigate. "It's possible some quirky deal slipped through the cracks," Anwyl said.
-- In at least 15 deals in nine states, owners of large pickups cashed in old trucks for between $3,500 and $4,500 toward new Hummer H3 SUVs that got only 16 mpg.
-- In at least 32 deals, drivers traded older vehicles for new large trucks -- including versions of Toyota Tundras, GMC Sierras, Chevrolet Silverados, Dodge Rams and Ford F150 pickups -- that got only 14 mpg.
Car-crazy California led clunker sales with more than 76,000 trade-ins, followed by Texas with roughly 43,000 and New York with nearly 37,000. In California, the Honda Civic was the No. 1 new car and no pickups ranked higher than 18th. In New York, the Hyundai Elantra was No. 1.
The clunkers program was very good for Longo Toyota of El Monte, Calif., just east of Los Angeles, which sold more than twice as many vehicles under the program as any other dealership in the country, worth more than $30 million. That sole dealership was responsible for 1,432 sales worth nearly $6 million in clunkers rebates, mostly from its sales of 323 Toyota Camrys, 277 Corollas and 171 Priuses.
"We knew it was just a matter of when, not if, we were going to get paid, so we kept our foot on the gas," Longo president Tom Rudnai said.

Big Four accountants face further criticism

The collapse of energy giant Enron and the problems at WorldCom have placed the accountancy profession under the spotlight as never before.
Both companies were revealed to have exaggerated their profits and hidden the extent of their debts and their auditor, Arthur Andersen, failed to expose the practice and has paid the price.
Now the remaining members of accountancy's so-called Big Four - KPMG, PricewaterhouseCoopers, Ernst & Young and Deloitte & Touche - are coming under pressure to answer allegations they operate an effective closed shop.
It has also been suggested their performance as auditors is compromised by their enthusiasm for lucrative consulting contracts.
Big Four
There's a new buzz-word doing the rounds in the financial community - low-balling.
If the large firms are themselves auditing all the large listed companies then it is not surprising every time there is a problem it is one of those firms that's involved
Peter Wyman, UK Institute of Chartered Accountants
Low-balling describes a practice which many commentators insist is becoming increasingly common in the accountancy profession.
According to some observers, the Big Four have deliberately lowered their prices in order to keep smaller, middle ranking accountancy firms out of the audit market.
The criticism is that smaller firms have been denied access to the more lucrative large scale consultancy roles.
Denials
Gavin Hinks, editor of the industry journal Accountancy Age, said the profession as a whole would argue that they haven't been low-balling, that they have been charging reasonable prices.
"That's ironic given that recently one of the responses of the profession to proposed new legislation and regulation is that audit fees will have to jump enormously to cover their extra cost, which seems to suggest that they haven't been really putting the effort into the work that they perhaps could have done," he said.
Peter Wyman, chairman of the UK's Institute of Chartered Accountants and a senior partner at PricewaterhouseCoopers said only the top four companies are capable of doing this work.
He said mid-size firms can't carry out the work because of the investment needed to be able to audit on a global basis.
"If the large firms are themselves auditing all the large listed companies then it is not surprising every time there is a problem it is one of those firms that's involved," he said.
Ongoing investigations
Since the recent accounting scandals broke, there have been calls for all auditing work to be distributed more widely - a sharp contrast to the current situation, where major contracts are monopolised by the elite.
The whole suggestion that somehow the audit is the loss-leader to get lucrative consulting work is completely unproven
Peter Wyman
This is despite the fact that some of the Big Four are currently being scrutinised by the US Securities & Exchange Commission for alleged irregularities.
Britain's financial watchdog, the FSA, the dominance of the four firms is worthy of the attention of the competition authorities.
Peter Wyman dismisses suggestions that audit work can be influenced by the prospect of lucrative consultancy contracts.
"The whole suggestion that somehow the audit is the loss-leader to get lucrative consulting work is completely unproven," he said.
"We've looked very carefully at the independent reports of audit failure and in not one single case is there any connection between consulting work or any other non-audit work and some alleged cause of failure," he added.
"So the whole notion that somehow audit quality is effected by doing consulting work is completely without foundation."
But however the accountancy profession fights its corner, it's clear that investors are likely to remain suspicious.

Enron board 'ignored financial warnings'

The board of Enron ignored evidence of financial problems at the company, a US Senate subcommittee has found.
"Much that was wrong with Enron was known to the board," the Senate Permanent Subcommittee on Investigations said in a report into the scandal.
The report said the board - which included the UK Conservative peer Lord Wakeham - failed to protect shareholders, and contributed to Enron's collapse last year.
Lawyers representing Enron and the company's former directors have disputed the findings.
'Red flags' missed
Enron collapsed last December, becoming the biggest company bankruptcy in US corporate history.
The firm's collapse was blamed on complex financial arrangements and questionable accounting practices.
The Senate subcommittee said that claims by former directors that they were not told about dubious practices were not true.
The report said directors failed to heed "more than dozen red flags that should have caused the Enron board to ask hard questions, examine Enron policies and consider changing course."
But attorney Robert Bennett, who is representing Enron, said the report was "grossly unfair" and that it leapt to "unfounded conclusions".
And an attorney representing Enron's former directors, W Neil Eggleston, said the board was "misled by Enron management and outside auditors about now-suspect transactions."
High-risk accounting
The report said that former Enron auditor David Duncan had warned directors on the audit committee about some of the company's accounting practices.
It said Mr Duncan told them that told directors on the audit committee some of the actions were "pushing the limits" and were "at the edge" of normal accountancy procedures.
Mr Duncan pleaded guilty to obstruction in the investigation into Enron's collapse, and last month was the chief prosecution witness in the trial of accountants Arthur Andersen
The firm was found guilty of obstruction of justice after it shredded documents relating to Enron.
Action needed
The report also said that the board failed to question the cash being generated by outside partnerships operated by Enron's Chief Financial Officer Andrew Fastow.
And it said the board gave the opportunity for company executives to improve Enron's accounts by waiving conflict-of-interest rules for Mr Fastow.
It also criticises the board for approving "lavish" pay packages for senior staff, and for failing to monitor a credit line used by Enron's former chief executive Kenneth Lay.
The report adds that the independence of some of the directors was compromised by consultancy payments they received from Enron.
The chairman of the subcommittee, Senator Carl Levin, said the findings showed the need for legislation tightening controls over accountants and corporate conduct.
On Monday an accounting reform bill is set to reach the floor of the US Senate.
The bill would establish an independent body to oversee accountants, and attempt to close regulatory loopholes.

Congress pushes accounting reform

US legislators' willingness to crack down on accounting scandals faced a major test on Monday as senators debated a bill to crack down on the accountancy business.
The bill, proposed by Senate Finance Committee chairman Paul Sarbanes, a Maryland Democrat, aims to create an independent board to oversee the profession.
The board would include two retired accountants, and would have power to set standards, fine or even ban accountants and auditors, and police sharp limits on what extra services - such as lucrative consultancies - they can offer clients.

Sarbanes: "Strain on the economy is deep"The proposals are harsher than a bill passed by the House of Representatives in April, and come less than 24 hours before President George W Bush is due to offer his own proposals for reform.
The proposal passed the Senate Banking Committee late last month, and on Monday went before the full 100-member Senate, which has a slim Democrat majority.
Threat
At a press conference on Monday, Mr Sarbanes said Wall Street scandals were depressing the chances of a healthy economic recovery.
"It is becoming increasingly clear that something has gone seriously wrong," he said.
"The strain on the economy is deep and spreading."
Recent corporate scandals demonstrated that self-regulation for the accounting industry did not work, he said, promising his bill would ensure that federal regulators have the power to halt corporate fraud.
He also suggested that Senate Democrats are ready to attach separate legislation authored by Senate Judiciary Committee chairman Patrick Leahy to his bill - legislation that would punish any scheme to defraud shareholders a criminal offense with 10 years in jail.
Head to head
However, the Sarbanes bill is not the only legislative attempt to clean up the bean-counting business.
The House, whose own Financial Services Committee is due to hold hearings into WorldCom, passed a bill proposed by Republican Michael Oxley in April.
The Oxley bill is less stringent than its Senate equivalent, and some pressure groups have suggested this is because accountancy firms have spent more on lobbying the House than the Senate.
In all, the Big Five have contributed more than $27m in the past 10 years to federal politicians.
Campaigners say even if the Sarbanes bill makes it through the Senate unadulterated, the joint committee to bring the two bills in line will almost certainly dilute it severely.
"There is an extraordinary gulf between the Osley bill and the Sarbanes bill," said Joel Seligman, dean of the Washington University School of Law in St Louis, Missouri and an expert on securities law.
"Here is where you need SEC (Securities and Exchange Commission) and White House leadership."
Too close for comfort?
The commission, which oversees quoted companies such as Enron and WorldCom, has its own take on reform, which is much closer to the House proposals than those of the Senate.

Pitt: SEC trying to restore lost credibility
But its chairman, Harvey Pitt, is himself in the firing line.
His previous career as a Wall Street lawyer means that all the Big Five are past clients, not to mention dubious figures such as insider dealer Ivan Boesky.
He now faces calls from senior lawmakers on both sides to stand down.
For the Democrats, Senate Majority Leader Tom Daschle told CBS TV that the US could "do a lot better than Harvey Pitt", labelling his relationship with those he is meant to oversee as "cosy" and "permissive".
On the Republican side, John McCain - the Senator who ran against George W Bush for the presidential nomination and is the most vocal proponent of campaign finance reform - also wants Mr Pitt to go, thanks to his "slow and tepid" response to the scandals.
Taking the initiative
As for the White House, President George W Bush is due to unveil his own proposals tomorrow for cleaning up US Inc.
Criminal penalties including jail terms will probably be on offer for executives who sign off on inaccurate - if not actually fraudulent - accounts.
The White House is facing its own embarrassments about corporate misbehaviour, including an investigation into alleged improprieties in the accounts of Halliburton, the oil company run till 2000 by Vice-President Dick Cheney.
Mr Bush, too, is in trouble, following revelations that he delayed reporting stock sales worth more than $1m while serving as a director of Texas-based Harken Energy more than a decade ago.

WorldCom chiefs refuse to testify

Bernie Ebbers, former chief executive of WorldCom, has refused to testify to a US Congressional committee on the basis that his testimony might incriminate himself.
Ex-chief financial officer Scott Sullivan followed suit, while other witnesses tried to shift the blame between one another for WorldCom's alleged misdeeds.
It looks like you were General Custer and WorldCom was the Indians, and you got slaughtered
Rep. Sue Kelly, New York Democrat, to Andersen's Mel Dick The committee hopes to discover how a $3.8bn (£2.5bn) accounting fraud could have gone unnoticed for more than a year.
Fresh from a scathing probe into collapsed energy firm Enron, the committee is striving to establish what, if any, laws were broken by WorldCom, and to what extent the current law needs tightening.
At the same time, efforts by Democrats to pass a tough bill regulating the accounting industry begin on the floor of the Senate, while Tuesday will see President George W Bush outline his own - slightly more lenient - vision of corporate regulation.
Taking the Fifth
But Mr Ebbers - who resigned in April, two months before WorldCom admitted its numbers for 2001 and 2002 were wrong - told the committee his counsel advised him to refuse to answer, as the Fifth Amendment to the Constitution allows.
He added: "When all of the activities at WorldCom are fully aired... I believe that no one will conclude that I engaged in any criminal or fraudulent conduct during my tenure."

Sullivan: said nothing except to take the FifthThat, and other asides, brought condemnation from two Republican Congressmen, Max Sandlin from Texas and Richard Baker from Louisiana, who said that by making a statement after refusing to answer, he had waived his Fifth Amendment rights.
The chairman, Ohio Republican Michael Oxley, told Mr Ebbers that the committee reserved its right to recall him and ask him questions about matters covered in his initial statement, and perhaps to charge him with contempt of Congress.
"Make no mistake, the consequences to this sort of criminal activity... should be severe, and that may mean time in federal prison" if it was proved that he or others were responsible for hiding nearly $4bn in expenses, Mr Oxley added.
Ex-WorldCom chief financial officer Scott Sullivan also took the Fifth.
Taking the stand
Aside from Messrs Sidgmore, Ebbers and Sullivan, chairman Bert Roberts, Salomon Smith Barney telecoms analyst Jack Grubman and Melvin Dick, a former partner at WorldCom auditor Andersen, are taking the stand on Monday.
It's incomprehensible to me that a major accounting firm can have such a dismal record
Bernie SandersVermont independent on Arthur Andersen Their testimony is unlikely to be especially controversial, since the firm's current management have expressed their willingness to assist investigators in any way they can.
In prepared testimony released to reporters ahead of time, Mr Sidgmore implied the failure to spot the accounting irregularities was the fault of the auditors, Arthur Andersen.
"In effect, we audited our external auditors, we found what they missed, and promptly brought this matter to the attention of the Securities and Exchange Commission," he said.
Right back at you
WorldCom chairman Bert Roberts said in his prepared statement that the accounting problems were an "outrage".
"To my mind, the failure of our outside auditors to uncover them is inconceivable," he said.
Ex-Andersen man Mel Dick, though, sent the ball straight back.
"Neither I nor any of my team had any inkling that these transfers had been made," he told the committee.
"I would be very interested in how and when (WorldCom's internal auditors) found these entries."
Under fierce questioning, he told the committee that it was entirely reasonable for Andersen to miss the figures amid "thousands and thousands" of transactions", and for them to have matched generally accepted accounting practices (GAAP).
He was asked over and over again whether his company had any wider responsibility, but simply repeated that Andersen's job was to ensure the audit happened according to GAAP.
"We did our audit in accordance with all the things we were expected to do," he said.
That was not enough for New York Democrat Sue Kelly, who told Mr Dick: "It looks like you were General Custer and WorldCom was the Indians, and you got slaughtered."
Bernie Sanders, an independent from Vermont, was more outspoken.
"It appears very clearly that Arthur Andersen failed in their audit of WorldCom, you failed in the audit of Enron," he said. "It is incomprehensible to me that a major accounting firm can have such a dismal record."
Buy, buy, buy
As for Mr Grubman - WorldCom's biggest cheerleader on Wall Street - he told the hearing he had no idea that WorldCom had dug itself such a hole.
Speculation that inside knowledge had informed his decision to downgrade the company on 21 June - ahead of WorldCom's admission - from 'strong buy' to 'underperform' was "categorically false", he said.

Dick: "Never an inkling" there was anything wrongHis testimony was littered with admissions that he "could not recall" specifics - and when asked for them, typically tried to rely on commenting on his firm's "typical" behaviour.
He admitted that favourable reports on a company made it easier for his firm to sell it investment banking services.
And he acknowledged going to three board meetings - a "rare" occurrence for an analyst.
But he insisted: "I have always formed my own independent opinions. Right or wrong, I have always called them as I saw them."
WorldCom's mis-statements meant he was not responsible if his predictions turned out wrong.
"Our judgements are only as good as the public statements," he said.
Political pressure
In recent months, a number of congressional committees have held hearings into a number of corporate governance issues, particularly in relation to Enron.

Ebbers hoped to avoid "negative inferences"But Congress has so far produced little in the way of tangible results, and the current investigation may be hobbled by the upcoming summer recess.
Mr Bush is also under pressure to produce results, since he is accused of having been too cosy with big business.
The Republican party is eager to show itself independent of commercial interests, after the embarrassment of the collapse of Enron, a major donor in the 2000 presidential campaign.
Mr Bush and his vice-president, Dick Cheney, have also had their own business dealings called into question by regulators.
The White House is tight-lipped over the exact contents of Tuesday's speech, but it is believed to contain a package of measures to make life tougher for delinquent executives, many of whom have avoided criminal charges in the past.

Making money from financial news

People tumbled headlong into stock markets last year.
Before parting with their cash, they headed to finance news websites, where they could get the news, opinion and prices needed to inform their decisions.
But watching share prices fall is nowhere near as much fun as watching them rise. So as the dot.com bubble burst, some of these financial news sites have run into trouble.
Now that those heady days of internet growth appear to be over - what kind of future is there for finance websites?
Going, going, gone
Their growth was driven by the development of the internet, the opportunities it offered and the demand for information it created.
Potential revenue streams for these kind of sites include subscription, advertising and syndication.
While some users do subscribe and some advertisers do advertise, it is by no means clear that enough do to ensure these companies can move into profit.
Even well-established brands have made some cutbacksThestreet.com pulled the plug on its high-profile UK subsidiary thestreet.co.uk last year, even though it had met its targets. It hoped that axing its UK arm would enable it to become profitable more quickly in the US.
Ecountries.com - the website which sought to provide high-level economic analysis online - has shut its virtual doors.
Globalnetfinancial - the parent company of Ukinvest.com - cut 50 jobs in March.
Even the more established media brands, such as the Financial Times, have cut down on their online offshoots.
Some of the print advocates of the internet economy have also suffered.
The Industry Standard, the parish magazine of the electronic economy, "suspended" its European edition in April, sacking 60 workers.
In a valedictory editorial, editor-in-chief James Ledbetter wrote: "It is one of the painful ironies of business cycles that at high economic points, companies are often willing to overspend just to ensure they remain in the game."
"At shakier times, they will shy away from what they acknowledge to be good investments, just to insure against losses."
Who wants them?
There is a mixed bag of evidence as to demand for financial information from European consumers.
Forrester Research suggests that viewing stock market prices is the seventh most popular online activity across Europe.
Jupiter MMXI's consumer research shows that financial information is a minority interest in the UK.
Only 4% to 5% of consumers surveyed are actively interested in managing their money, senior analyst Nick Jones points out.
"For the vast majority of people it is a painful process that is not pleasurable," he added.
Advertisers
But while it is hard to come up with a definitive figure of interested consumers, it does seem clear that advertisers like the people who log on to financial websites.
"They were one of the first group of advertisers to take the web... [however] the overhead of building content to put those adverts next to is very expensive," Jupiter MMXI's Nick Jones said.
Finance-related websites attracted more than 11% of overall online advertising spending in December last year, according to Forrester Research's Luca Paderni. But falling share prices has seen traffic to these sites fall, he wrote in April. Instead they are turning to sites which offer a pleasant distraction, such as entertainment.
In February this year, Europe's financial news sites saw 10.2 million unique visitors compared with 9.1 million in January, according to NetValue. Advertising revenues for financial sites fell from 3.9 million euros in January to 3.1 million euros in February.
US difference
By contrast, in the US, not only do more people hold and trade shares, but there is a far wider range of financial products on offer.
The sheer variety of financial products on offer means that there was a role for sites which detail them, Rob Sterling, financial services analyst at Jupiter in the US said.
"There are 8 or 9000 mutual funds in the US, there is a real service for cataloguing and trading them," he pointed out.
These sites may find viewers in longer-term traders, who don't log on as frequently, but provide steady custom.
Unique site visitors to financial news websites in the US were slightly up in February, despite the drop in the Nasdaq, indicating a more dedicated readership.
Syndication
The sites that could do best "are the ones that provide content for banks and brokers, syndicated content and advice services, those will be the ones that make the strongest showing," Rob Sterling said. He points to some 10,000 US banks, who either have websites or will want them. "Where are they going to get the content? They are not going to get it themselves, they will get it from syndicated content providers," he said. This approach leaves news providers such as Reuters in a strong position.
This model is similar to that adopted by Onvista, the German company - already profitable in its home country - which launched in the UK in April. A spokeswoman for Onvista.de said: "We are making most of our money by licensing our content to other websites. We have about 45 licensing clients, mostly banks, stock exchanges and media companies. "
Depressingly for the journalists who have been laid off from financial websites, she says one of the secrets of their success is that they don't employ their own journalists.
She added:"One of our success factors is we don't have an editorial team...it is less expensive to buy [news] and display it."

Australia shares end down 0.7 pct; miners, property drag

Australian shares fell 0.7 percent on Thursday, with miners and property groups dragging the market lower and health-care stocks limiting the declines, after an unconvincing rally on Wall Street.
Brokers said the market was teetering around 4,500, and said there was little news that would drive it much higher before the end of the year, with few results left to come.
"There's just a bit more uncertainty. Overseas markets seem to be skittish, and the recovery's uneven," said David Spry, research manager at broker FW Holst.
The benchmark S&P/ASX 200 index .AXJO lost 32.1 points to finish at 4,508.0.
New Zealand's benchmark NZX 50 index .NZ50 also fell 0.7 percent, ending at 3,144.5.
"It's very hard to see the share market going sky-high without some improvement in the U.S. Even China needs the U.S., too," said Spry.
The top performer on Thursday was toll road operator Transurban Group (ASX: TCL.ax) which soared 19 percent to A$5.24, a nine-month high, after two Canadian pension funds made a $4.4 billion buyout bid that was rejected by the board. [ID:nSYD544423]
Retailers slipped after department store chain David Jones (ASX: DJS.ax) reported 2.2 percent growth in first-quarter sales, well below analysts' forecasts, while newly listed rival Myer MYR.AX said first-quarter sales rose 5.2 percent.
David Jones fell 4.2 percent to A$5.19. Myer dropped 2.1 percent to A$3.76, sliding further below its A$4.10 issue price. Top supermarkets group Woolworths (ASX: WOW.ax) ended down 0.9 percent at A$27.66.
Miners BHP Billiton (ASX: BHP.ax) and Rio Tinto (ASX: RIO.ax) both lost about 1.3 percent, with BHP closing at A$36.44 and Rio at A$62.59.
In the property sector the two biggest trusts, Westfield Group (ASX: WDC.ax) and Stockland Group (ASX: SGP.ax) , fell 1.2 percent and 2.1 percent respectively.
Among the banks, Australia and New Zealand Banking Group (ASX: ANZ.ax) was the only loser, down 2.9 percent at A$22.07 after its shares traded without rights to its dividend. Commonwealth Bank of Australia (ASX: CBA.ax) led the banks' gains, ending up 0.9 percent. (Reporting by Sonali Paul and Adrian Bathgate; Editing by Mark Bendeich)