By Elana Schor - 07/11/06 12:00 AM EDT
Hours after Henry Paulson, the onetime chairman of the Financial Services Forum, was sworn in as treasury secretary, the Forum yesterday assembled a senior treasury official and three House members for a debate on the costs and benefits of Sarbanes-Oxley, 2002's sweeping corporate-governance law.
Rep. Tom Feeney (R-Fla.), who continues to push legislation granting smaller public companies a reprieve from Sarbanes-Oxley's auditing rules, used his appearance at the debate to play up the comparative advantage that the law gives to overseas financial markets, many of which lack the United States' strict corporate-governance laws.
"The high burden of regulation and compliance is outsourcing America's lead in world capital markets," Feeney said through a spokeswoman. "More companies are increasingly turning to London and Luxembourg instead of New York in order to raise capital."
Rep. Vito Fossella (R-N.Y.), a Sarbanes-Oxley backer in 2002 whose district is close to Wall Street, stopped short of an outright call for Sarbanes-Oxley relief but stressed the need to make sure that the law's new rules "allow New York City and the United States to remain the financial center of the world."
Another New Yorker, Democratic Rep. Joseph Crowley, said he hoped the debate would give momentum to his bill to refine the executive branch's foreign-acquisitions oversight process, which has received intense scrutiny since February's failed Dubai Ports World deal. Crowley's foreign-investment bill, co-sponsored by House Majority Whip Roy Blunt (R-Mo.) and GOP Conference Chairwoman Deborah Pryce (R-Ohio), could see House action as soon as this month.
Treasury Undersecretary Randal Quarles came to the debate prepared to tout Sarbanes-Oxley's restorative effect on investor confidence, which has been shaken by corporate scandals from Enron to WorldCom. But Quarles, through a spokeswoman, added, "We must also ensure that U.S. regulation - including the interpretation, implementation and enforcement of Sarbanes-Oxley - avoids overburdening [the] markets."