Goodbye to Reforms of 2002

NY Times ^ | November 6, 2009 | FLOYD NORRIS

[neverdem]

It took just five weeks after the WorldCom accounting scandal erupted in 2002 for Congress to pass, and President George W. Bush to sign, the Sarbanes-Oxley Act. That...

--snip--

The House Financial Services Committee this week approved an amendment to the Investor Protection Act of 2009 — a name George Orwell would appreciate — to allow most companies to never comply with the law, and mandating a study to see whether it would be a good idea to exempt additional ones as well.

Some veterans of past reform efforts were left sputtering with rage. “That the Democratic Party is the vehicle for overturning the most pro-investor legislation in the past 25 years is deeply disturbing,” said Arthur Levitt, a Democrat who was chairman of the Securities and Exchange Commission under President Bill Clinton. “Anyone who votes for this will bear the investors’ mark of Cain.”

--snip--

This year, a subcommittee of the House Financial Services Committee held a hearing at which legislators sought no facts but instead threatened dire action if the chairman of the financial accounting board did not promptly make it easier for banks to ignore market values of the toxic securities they owned. The board caved in, which may be one reason why banks are reporting fewer losses these days.

But the board’s retreat was not enough to satisfy the banks. The American Bankers Association is now pushing Congress to give a new systemic risk regulator — either the Federal Reserve or some panel of regulators — the power to override accounting standards. The view of the bankers is that the financial crisis did not stem from the fact that the banks made lots of bad loans and invested in dubious securities; it was caused by accounting rules that required disclosure when the losses began to mount...

[neverdem]

Sarbanes-Oxley was an over reaction to what was needed, IMHO. But the rats want to ignore the irresponsible lending standards they enabled with the Community Reinvestment Act, Fannie Mae, Freddie Mac, collateralized debt obligations, etc. and the credit default swaps that were supposed to cover bonds that couldn't be rated.

[goldstategop]

It didn't work and it hand-cuffed businesses and accounting firms to rules even the federal government itself didn't abide by. Eventually a bad law gets thrown out.

"Show me just what Mohammed brought that was new, and there you will find only things evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelogus

[glock_fan]

SOX is a complete disaster. Our company had to hire an army of accountants to keep up with the b.s. requirements for this. Thanks to this stupid law some of our quarterly results show a net loss instead of a profit thanks to the GAAP vs non-GAAP reporting methods.

As with McCain-Feingold, signing this into law was one of Bush’s biggest blunders.

[SuziQ]

Sarbannes-Oxley didn’t to a blessed thing to prevent the financial problems we have today, so in my opinion, it’s USELESS!

[SunkenCiv]

Thanks neverdem.