Under the Sarbanes-Oxley law, regulators have imposed incredibly expensive requirements for auditing American businesses, costing our economy $35 billion annually, and reducing the value of the U.S. stock market by hundreds of billions of dollars.
But it did nothing to stop Countrywide Financial from making risky mortgage loans to irresponsible borrowers with bad credit, as CEI’s John Berlau explains, even though Countrywide was a “paragon” of Sarbanes-Oxley compliance. The reason is that Sarbanes-Oxley regulations focus attention on the trivia of companies’ “internal controls,” such as which employee has access to which computer password, rather than important things that really matter to a company’s long-run financial health and survival. Countrywide’s “wholehearted embrace” of Sarbanes-Oxley’s mind-numbing regulations distracted its attention away from looming dangers.
As I earlier explained, although Sarbanes-Oxley was passed in response to the Enron scandal, it will do nothing to prevent another Enron. Indeed, Sarbanes-Oxley violates the Constitution by vesting regulatory powers in an unaccountable agency, the Public Company Accounting Oversight Board (PCAOB), which has created volumes of red tape. CEI argues in court that the provisions of Sarbanes-Oxley setting up the PCAOB are unconstitutional.
I earlier wrote about how risky mortgage lending was encouraged by federal regulations like the Community Reinvestment Act, and by the threat of discrimination charges and lawsuits against lenders that behaved responsibly by refusing to lend to bad credit risks.
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[...] Lawsuits aren’t the only reason capital is fleeing America for better investment opportunities elsewhere. Another reason is the devastatingly costly Sarbanes-Oxley law Congress passed in 2002 in the wake of the Enron bankruptcy. That law’s burdensome bureaucratic requirements and regulations have cost the stock market $1.4 trillion in value, and imposed an additional $35 billion in annual compliance costs on American business, while doing nothing to prevent another Enron, as recent mortgage losses at Countrywide Financial show. [...]
[...] Lawsuits aren’t the only reason capital is fleeing America for better investment opportunities elsewhere. Another reason is the devastatingly costly Sarbanes-Oxley law Congress passed in 2002 in the wake of the Enron bankruptcy. That law’s burdensome bureaucratic requirements and regulations have cost the stock market $1.4 trillion in value, and imposed an additional $35 billion in annual compliance costs on American business, while doing nothing to prevent another Enron, as recent mortgage losses at Countrywide Financial show. [...]
[...] in value, and business $35 billion in annual compliance costs, while doing virtually nothing to prevent corporate mismanagement).  Ted Frank, Director of the AEI Legal Center, reports that “the DC Circuit heard [...]
[...] in value, and business $35 billion in annual compliance costs, while doing virtually nothing to prevent corporate mismanagement).  Ted Frank, Director of the AEI Legal Center, reports that “the DC Circuit heard [...]
[...] in value, and business $35 billion in annual compliance costs, while doing virtually nothing to prevent corporate mismanagement).  Ted Frank, Director of the AEI Legal Center, reports that “the DC Circuit heard [...]
[...] in value, and business $35 billion in annual compliance costs, while doing virtually nothing to prevent corporate mismanagement).  Ted Frank, Director of the AEI Legal Center, reports that “the DC Circuit heard [...]
[...] over $1.4 trillion, and annually imposes compliance costs of over $35 billion, while providing only illusory benefits for investors. But rather than being picked by the President with Senate approval, the way important [...]
[...] by the mortgage crisis, like Countrywide Financial, were paragons of Sarbanes-Oxley compliance, using compliance with its red tape to mask underlying problems. The law has driven businesses and jobs overseas, virtually drying up I.P.O.s. And the [...]