Silicon Valley venture capitalists will finally see Sarbanes-Oxley being wound back. They have been pushing politicians and regulators hard to water down the legislation, claiming it had resulted in a decline in IPOs.

Now Bloomberg reports that the presumptive new speaker of the House, nancy Pelosi, is working closely with that sector. Indeed, she actually received more campaign money this year from venture capital outfit Kleiner Perkins Caufield & Byers than she got from the traditional Democrat soul-mates in the US union movement.

Bruce Cain, director of the Institute for Government studies at the University of California at Berkeley has told Bloomberg that weakening legislation designed to stop corporate corruption could backfire on the Democrats, particularly given the public backlash over the Republican ethics scandals. But with a presidential election just two years away, the Democrats know they need to get away from their old image of being anti-business regulators, which means the middle road is the best course. Yes, even if that means championing some traditional Republican values.

In that context, appealing to business by changing Sarbanes-Oxley makes political sense although we can expect some traditional divisions and sparks to fly on issues like taxes and hopes of business to limit lawsuits. For more on how those issues will play out, check this news report.

Still, it looks like the business of changing Sarbanes-Oxley will be left to the regulators with the chiefs of the Securities and Exchange Commission and the Public Company Accounting Oversight Board getting together last weekend to talk about how they were going to do it. Discussions will continue on the much-hated Section 404 of SOX and small companies, reports Reuters.