Great call for action by Gingrich. Not a conservative thing or liberal thing, but a common sense move for our economy and its future.
by Newt Gingrich and David W. Kralik
It has been six years since Congress passed the Sarbanes-Oxley Act after the devastating accounting irregularities of Enron and WorldCom. While the intent of the law was to prevent corporate fraud, there is growing evidence that it has done more harm than good, and is undermining the venture-capital industry in Silicon Valley. Now, with signs that our economy is moving toward recession, Congress should take this opportunity to repeal the law.
Rep. Michael G. Oxley, R-Ohio, recently said in an interview with the International Herald Tribune that Sarbanes-Oxley was passed in haste. "Frankly, I would have written it differently. ... Everyone felt like Rome was burning."
Sarbanes-Oxley went too far in regulating corporate governance, resulting in at least three unintended consequences.
-- It was insufficient at preventing insolvencies and accounting shortfalls in companies such as Bear Sterns, Lehman Bros., American International Group (AIG) and Merrill Lynch.
Estimates from leading figures in the venture-capital community indicate the average company will now take 12 years before it can successfully issue an initial public offering (up from five years pre-Sarbanes-Oxley) because they do not have enough capital to cover the estimated $4.36 million hidden tax in yearly compliance costs, according to an estimate by the Financial Executives International... (full article)