With Wall Street encountering severe turbulence and the White House struggling to find the right words, the Senate this week actually did something to show it is serious about corporate ethics. By a vote of 97 to 0, the Senate passed legislation that is a major step toward holding corporations and their auditors accountable for lying to investors, many of whom have lost their retirement savings in a plunging stock market. Now the legislation faces two big challenges -- one from members of Congress who will fashion the final legislation in the dark and another from a president who seems conflicted about really cleaning up the system.

The Senate measure would impose tough new controls on corporate officers and their accountants. The show of unity in the Senate was impressive, but the legislation still must be reconciled with a weaker version passed by the House of Representatives.

The Senate bill is the only credible starting point toward restoring investor confidence in the market. It would create a new oversight board to govern and discipline the accounting industry, ban auditors from making extra bucks giving their clients a range of financial advice and end the practice of insider loans to top corporate officers. These are reasonable restrictions on people entrusted with other people's money. Under the bill, auditors would report to a committee of a company's board of directors, rather than, as is current custom, to the management whose practices those auditors review.

These are fundamental protections that can be accomplished only by drawing a clear line between auditors and the people who run publicly traded companies. The Senate also toughened the penalties for false reporting and outright fraud, but the real strength of the legislation is the groundwork it lays to prevent fraud from happening in the first place.

Here is where the president and the House so far have missed the boat. The president has talked tough about sending corporate cheaters to prison, and the House, sensing the national mood, jumped on the bandwagon Tuesday, passing new criminal penalties for fraud. But investors won't be reassured by longer prison terms for white-collar crimes that seldom lead to convictions in the first place. Instead, they want serious regulatory reforms that will help to protect their savings. Penalizing lawbreakers is important, but the focus should be on operating changes that make corporate American more open and accountable.

It's no surprise the people who brought us Enron and WorldCom would prefer the House alternative. But the House plan is full of the same sort of vague proposals that the president has tried, without success, to float for weeks. The Senate bill, crafted by Banking Committee Chairman Paul S. Sarbanes, D-Md., makes several accommodations. It would keep some disciplinary proceedings private and allow limited exceptions to the consulting ban. The legislation doesn't go as far as Coca-Cola and other companies have gone voluntarily to account for the true cost of executive compensation, but that move could resurface later this year.

The unanimity of the Senate vote sent an important message. The broader underpinnings of the economy are stronger than the market would suggest, as Federal Reserve Chairman Alan Greenspan told Congress this week, but no one will hear that message until there is stability in the markets. The president needs to embrace the language and spirit of the Senate bill and bring into line congressional Republicans who, like him, are reluctant to snap a government leash on corporate America.

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