New York's increased competition from other world financial centers, such as London and Hong Kong, due to the increased regulatory burden imposed by Sarbanes-Oxley in the United States is becoming a real problem for the Big Apple. Now The Wall Street Journal's John Fund and the Financial Times' Gideon Rachman provide two telling quotes that sharply underscore Wall Street's difficulties. Writes Fund:
"Last year, of the 25 largest initial public offerings in the world, only one took place in America. This year, Hong Kong is likely to end up as the No. 1 market for stock offerings world-wide... "Henry Tang, Hong Kong's financial secretary, couldn't be more blunt on the good fortune Sarbanes-Oxley has brought his city. 'Our success is giving [Treasury Secretary] Hank Paulson a few raised eyebrows...Thank you, Mr. Sarbanes and Mr. Oxley,' he said, referring to Democratic Sen. Paul Sarbanes and GOP Rep. Mike Oxley, the law's chief sponsors."Meanwhile in London, writes Rachman:
"Michael Spencer, a prominent eurosceptic who is the head of Icap, an interdealer broker, says that the City of London 'should put up statues of Sarbanes and Oxley in Paternoster Square.'"Of course, that doesn't mean the UK is in the clear.
But people like Mr Spencer fear that regulation from Brussels could damage the City, in the same way that regulation from Washington has hurt Wall Street.American and British lawmakers would be wise to listen to a Hong Kong businessman interviewed by Fund:
"Your current policies amount to unilateral disarmament in the contest for IPO's. The next year or so will be a test for whether you can wake up in time."