Democrats Open Door To Looser Business Rules
Thursday, March 15, 2007
Senior Democratic lawmakers told the nation's largest business lobby yesterday that they are open to compromise on industry priorities so long as investors are protected.
Speaking at the Summit on Competitiveness sponsored by the U.S. Chamber of Commerce, Rep. Barney Frank (D-Mass.) offered to give securities regulators more flexibility to tweak the Sarbanes-Oxley law, a 2002 corporate accountability measure that has proved more costly for business than government officials intended.
Frank, who leads the House Financial Services Committee, also raised the possibility of giving banks an exemption from a burdensome rule forcing corporate executives to sign off on financial controls that guard against fraud and abuse, reasoning that banks already must comply with a similar measure.
Frank and Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, told an audience packed with industry groups and lobbyists that Democrats are more receptive to business interests than stereotypes suggest. Dodd, for instance, voted to override President Bill Clinton's veto in order to impose new limits on class-action lawsuits by shareholders more than a decade ago.
Yet Dodd was quick to warn against a regulatory "race to the bottom" in the face of industry recommendations, including a new study backed by the Chamber of Commerce that calls for loosening some corporate rules to make U.S. markets more friendly to international companies.
"Our capital markets are strong precisely because of the legal architecture" in the United States, he said. Dodd vowed to hold hearings on the issue this year.
Many Democrats also welcome efforts by an unusual coalition of business and civil liberties advocates to change a Justice Department policy that governs when companies are charged with crimes. House and Senate panels have held hearings on the issue in the past few months.
In his speech, Frank noted that it was the Bush Justice Department that indicted the Arthur Andersen accounting firm five years ago, hastening its demise. And it is the Republican-controlled Securities and Exchange Commission that has enforced compliance with accounting rules, he said.
"We are now on our third SEC chairman in a Republican administration," Frank said. "To the extent you are still dissatisfied with the SEC, it ain't my fault."
For his part, SEC Chairman Christopher Cox, who boasted an 87 percent lifetime approval rating from the Chamber of Commerce during his tenure as a Republican House leader, said at yesterday's conference that his agency already had sufficient authority to tinker with Sarbanes-Oxley and related rules. Cox cautioned against using the 2002 law as a "handy whipping boy" for the problems of U.S. business.
"We don't need to change the law," Cox said. "We need to change the way the law is implemented."