For those who think that I hate the NYT, I have a big surprise; some gushing praise. An editorial in today's paper hits a real home run, trashing efforts to water down the corporate accountability rules in Sarbanes-Oxley. The editorial gets it exactly right, putting Wall Street's quest for weaker rules in the context of global competition for business. As the editorial notes, Wall Street is losing market share, not because of accountability rules, but because it charges too much. (Ever wonder where those $100 million paychecks come from?) Corporate management decides where to list shares, arrange mergers and buyouts, and carry through other financial business. Wall Street hopes that by weakening rules that protect investors against management abuses, it can make itself a relatively more attractive market to corporate management. This is a protectionist move in the same vein as the steel industry's efforts to get higher tariffs back in 2001. [I previously had said in this post that former Treasury Secretary Robert Rubin was one of the people behind the effort to weaken SOX (now removed). I have now re-read the original NYT article, after seeing a comment by DRR, and can find no reference to Robert Rubin and his support for weakening SOX. I am not quite sure how I could have imagined his name appearing in an article, but I will assume that I somehow misread the piece. I apologize to Mr. Rubin and BTP readers for spreading inaccurate information on this one.]
-- Dean Baker