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"It's over," Greenspan said of the worst abuses.




"To manage your earnings so you can affect the stock price is going to disappear," Greenspan said. "Indeed I think it's very much disappearing."




In his second day of testimony to Congress on the economic outlook, Greenspan said proposals to require chief executive officers of large corporations to certify the accuracy and reliability of their financial reports should solve most of the problems with accounting.




"It cuts to the core" to have CEOs swear that their books are honest, Greenspan said.




The Securities and Exchange Commission is requiring the 945 largest public corporations to certify by Aug. 14 that their books are accurate and not misleading.




"If we get a lot of restatements, which I presume we may very well, I'm not sure that's all bad," he said, because it would mean that major corporations are abandoning the methods they used to pump up stock prices during the 1999-2000 bubble.




"I hope we get restatements," he said.




Greenspan said the tremendous rise in stock values in the late 1990s encouraging some to try to "harvest" some of that gain by misrepresenting their companies. But now that the excess is gone, there's no enticement to inflate earnings.




Greenspan said smaller companies should not be required to certify their books, because that would overwhelm the SEC without providing much extra benefit.




Congress needn't rush to judgment on ways to prevent future scandals, but should act before the public's attention is diverted, he said.




The House and Senate have passed competing versions of a bill that would require more independence of auditors and that would impose severe new criminal penalties for corporate officers who cheat the public. Greenspan said he didn't know enough about the two versions to express a preference.




Greenspan said he did not believe corporations or the economy were corrupt to the core. "We've got a remarkably efficient economy" that is incompatible with systemic corruption, he said.




Greenspan said companies should be allowed to offer options to their employees and officers to buy stock, but he insisted that companies must report the costs of those options on their books.




He said several high-tech companies were able to survive only because they misrepresented their true costs of doing business, turning losses into profits.




"What they effectively did was that they used a very significant amount of labor resources to produce new goods and services, but didn't count them as any cost," he said. "So you get an artificial view that there is profit -- meaning that you produced more than you used up, than in fact was the case."




Greenspan said the marketplace would force companies to properly account for the costs of options. The Financial Accounting Standards Board should adopt a rule requiring expensing of options at the time of their granting, he said.




Greenspan repeated his testimony from Tuesday that the fundamentals of the economy look good. The Federal Open Market Committee is forecasting that the economy will grow between 3.5 percent and 3.75 percent in 2002 and up to 4 percent next year, while inflation should remain low.