Earlier this week, I did a blog entry on how White House chief of staff Rahm Emanuel was pushing wants Democrats to let small public companies worth less than $75 million avoid complying with Sarbanes-Oxley.

And now the House Financial Services Committee voted 37-32 to do just that. And it's a permanent exemption!

This is a disgrace. Section 404 of the Act requires executives to sign off on the integrity of internal controls, just to make sure that the company's accounting is in order. The purpose of the legislation was to restore some credibility to financial reporting and the way companies are run.

This is a disgrace. After last year's market meltdown, what we need are tougher rules. But this latest waiver is consistent with the administration's toothless approach to fixing derivatives and determination to codify the too-big-to-fail mantra in legislation. It's all part of the same pattern.

As Isaiah Poole writes in the Blog for Our Future, it's putting investors at risk. "The consequence of the amendment these members backed is that while these companies can't individually do the damage Enron did through its fraudulent accounting and its manipulation of energy markets, millions of investors who have small-cap stocks in their portfolios could be ripped off by hordes of mini-Bernie Madoffs. These companies should not be considered too small to play by the rules."

It's a betrayal of investors and the market.