New York – An article in the Wall Street Journal today, details a summit of big thinkers who congregated to discuss the U.S. legislative environment and its international competitiveness with other financial markets globally. Among the participants (in no particular order) were: Henry Paulson, Treasury Secretary; Warren Buffett, CEO of Berkshire Hathaway; Robert Rubin, ex-Treasury Secretary; Alan Greenspan, Federal Reserve Chairman emeritus; Arthur Levitt, ex-Chairman of the SEC; John Thain, CEO NYSE; Jeffrey Immelt, Chairman and CEO of GE; and Ann Yerger, Executive Director of the Council of Institutional Investors.
The concern is that, if the competitiveness of the U.S. financial industry is impinged by too much regulation, it will lose business to international markets. In particular, the tacit discussion revolved around the need to back away from the stringent rules coming out of the Sarbanes-Oxley Legislation of 2002. In fact, the session was part of a U.S Department of Commerce conference on the need for regulatory overhaul.
Robert Rubin stated that he would personally have to think twice about signing financial statements if he were a CEO in a business, since the legal risk could come back to roost years after the financials were attested to. Alan Greenspan reflected that he did support the executive certification of financial statements, but felt that the massive regulatory response seen was somewhat of an over-kill.
There was really very little agreement that the U.S. markets actually needed fixing, among the participants.
The movement of business offshore is a concern, but one that must be balanced rationally in regulatory circles. If the U.S. is losing business to countries where the regulatory structure is lax, this is not a reason to ease U.S. investor protection. If, however, there are other, less onerous ways to accomplish greater executive accountability, then these should be seriously considered.
We include a link to WSJ story.