Election Wins for Sarbanes-Oxley Reform
Washington, D.C., November 14, 2006—Reform of the onerous Sarbanes-Oxley accounting mandates was a winning issue for Democratic and Republican candidates in the election of 2006, according to an analysis by the Competitive Enterprise Institute’s Center for Entrepreneurship.
Democrats, the big winners in this year’s election, advocated broad legislative efforts at lightening the burdens of Sarbanes-Oxley, which was rushed through Congress in response to the bankruptcies of Enron and WorldCom in 2002. “In their rhetoric, they outflanked GOP leaders who said no legislative changes were necessary,” notes John Berlau, director of the Center for Entrepreneurship.
“Nancy Pelosi, Chuck Schumer, John Kerry, and, ironically, incoming New York Gov. Eliot Spitzer have said throughout the election season that Sarbanes-Oxley is too burdensome,” said Berlau.
Additionally, House Republicans who had signed on to a 2006 bill to scale back some of the law’s most costly provisions were all re-elected to office. In fact, some of the bill’s sponsors, like Rep. Geoff Davis (R-KY), and Rep. Randy Kuhl (R-NY), were competing in some very tough races. Not one of the 25 GOP sponsors of Rep Tom Feeney’s COMPETE Act, which would scale back Sarbanes-Oxley’s most onerous provisions, suffered defeat.
Just prior to the election, House Speaker-to-be Nancy Pelosi said that the law had “unintended consequences” and indicated she was open to throwing out some sections. Of the law, she told CNBC’s Larry Kudlow, “You need the transparency. You need the focus on it. But you don’t need—I don’t think you need the whole package.”
“Election 2006 shows that scaling back Sarbanes-Oxley has proven to be good politics as well as good policy,” said Berlau. “Billions of dollars and thousands of man hours have been spent by entrepreneurs and employees complying with burdensome mandates that are often counterproductive for shareholders. The returns are in, and Sarbanes-Oxley overhaul is a winner.”