Treasury Secretary Henry Paulson has admitted something that most people with good sense long ago, government regulation harms business:
Treasury Secretary Henry M. Paulson Jr. yesterday criticized the nation’s “ever-expanding rulebook” and its burdensome legal system for constraining the economy but rejected wholesale revisions to a corporate accountability law under attack from business groups.
Paulson, a former chairman of the investment bank Goldman Sachs, called for striking a regulatory balance as he delivered his first major policy address on the subject since joining the government in July. “Excessive regulation slows innovation, imposes needless costs on investors, and stifles competitiveness and job creation,” he said in a speech to the Economic Club of New York.
Sounds good so far, unfortunately, that’s about where it ends:
But under questioning, Paulson stood behind the controversial Sarbanes-Oxley law, passed in 2002 after financial scandals rocked the stock market and devastated investor confidence. Policymakers do not need to reopen the law, Paulson said. Instead, he expressed confidence in the work of securities regulators and accounting industry overseers, who are racing to make audit rules more flexible for small businesses that have complained about the regulations’ cost. The eagerly awaited proposed revisions are to be unveiled within weeks, Christopher Cox, chairman of the Securities and Exchange Commission, has said.
“I don’t think there is a single principle in [Sarbanes-Oxley] that is ill-founded,” Paulson said after the speech.
Translation: All regulation is bad, except regulation I like.
Sarbanes-Oxley needs revision. It has been onerous for small businesses. And it basically drove small accounting firms out of the audit business.