In his first speech as Treasury Secretary, Hank Paulson has dropped a none-too subtle hint about unwinding aspects of Sarbanes-Oxley, claiming the "pendulum'' of corporate governance has swung too far.
Raymond Nize's Nize Notes blog provides us with some of the text of the speech Paulson gave at Columbia University:
"There have been plenty of challenges over the last five years, not the least of which were the corporate scandals involving such companies as Enron and WorldCom. Corrective measures to address corporate scandals and increase investor confidence also played a role in the recovery. I take pride in the fact that when there is a problem in the United States – like no other nation in the world – we shine a light on it and move quickly to clean it up.
"Often the pendulum swings too far and we need to go through a period of readjustment. But there is no doubt that certain legal and regulatory actions were critical to restoring confidence. The challenge before us now is how to achieve the right regulatory balance to allow us to be competitive in today's world while guarding against the recurrence of past abuses."
Let's give this some political context.
In his new job, Paulson doesn't have the authority to unwind corporate governance measures, like Section 404, but there's no doubt his comments would certainly provide ammunition for those wanting to change or scrap the law.
The more interesting question is whether his comments signal that the Bush administration is rethinking Sarbox. Might be worth watching for more signals.
Paulson's comments coincide with the chairman and chief executive of the American Stock Exchange, Neal Wolkoff, attacking Sarbanes-Oxley in the Financial Times. According to Wolkoff, Sarbanes-Oxley has inhibited smaller companies from accessing US capital markets and has reduced the competitiveness of US stock exchanges.
You can read the full piece here.
Despite the warnings of doom and gloom for US stock exchanges however, Nasdaq chief executive Bob Greifeld, while visiting India, has been reported saying that more foreign firms have decided to comply with US law and will be listing on the world's biggest capital market.
no comment untill now