Rep. Richard Baker, chairman of the House Financial Services capital markets subcommittee, accused FASB chief Robert Herz of politicizing the dispute by recently urging institutional investors to voice their support for options expensing in Washington to counter a lobbying blitz by high-tech companies against the practice.

The Louisiana Republican also said Herz's action should end any debate about whether Congress should intervene in accounting disputes.

"To engage the resources of a lobbyist, and for the chairman of the board to then make a political request of the constituencies to affect and influence the Congress, has now opened the door," Baker said.

Baker said it is absurd to think Congress would ignore an issue that has generated such controversy and that FASB itself has issued for public comment.

"If you want to have a public discussion where all interested parties express their opinion, there is no more open venue, no more free of influence, no more publicly regarded venue than the United States Congress," he said.

As an alternative to FASB's proposal, Baker has introduced a bill that would limit counting the cost of options to the top five executives and bar the Securities and Exchange Commission from recognizing the board's rule until an economic impact study has been completed. The legislation now has more than 100 co-sponsors. Baker said he expects the full committee to schedule a vote on the bill by late June.

Indeed, in a redux of FASB's 1994 effort to mandate options expensing, more and more lawmakers are lining up against the initiative. One of the latest is Rep. Barney Frank, D-Mass, who said he fails to see drawbacks in the current treatment of options and who plans to introduce legislation directing the SEC to issue rules punishing top decision makers who cash in options that adversely affect a company.

House Financial Services Chairman Michael Oxley, R-Ohio, also appears to be edging toward Baker's position. "If it is true that the adoption of FASB's employee stock option expensing rule would cause significant and serious damage to job creation, then it becomes an economic policy issue and one that Congress should certainly review," Oxley said.

Others in Baker's camp include Reps. Joseph Crowley, D-N.Y.; Ed Royce, R-Calif.; Rubén Hinojosa, D-Texas; and John B. Shadegg, R-Ariz.

"There is no accurate or reliable formula to value these options," Hinojosa said, reiterating a common complaint against expensing. "The least we can do is delay implementation of the FASB rule."

Sen. Mike Enzi, R-Wyo., said at a hearing Tuesday that mandatory expensing could disrupt small-business and job creation. He criticized FASB for not offering guidance on how to value options and said the formulas it does recommend would force small businesses to hire expensive auditors. "The valuation approach as proposed by FASB would turn the American dream of running a small business into a nightmare," Enzi said. "The proposal itself is more than 230 pages long, including appendixes. Small businesses have no choice but to hire expensive experts to delve into the voodoo valuation."

FASB's hopes for salvaging the expensing rule could lie in the Senate, where Banking Committee Chairman Richard Shelby, R-Ala., said Congress should not get involved in setting accounting standards.

Echoing this view is Federal Reserve Board Chairman Alan Greenspan, who on Wednesday urged Congress not to interfere with FASB's rulemaking effort. "It would be a bad mistake for Congress to impede FASB in this way," he said, adding that the rule change "strikes me as correct."

-- Donna Block