|  | | 2006 News and Press Releases | | |
HEADLINE NEWS:
Democrats Should Push Accounting Reforms
Staff Writer - Daily Breeze
Securities Mosaic. December 4, 2006
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EXCERPT: The good news is that at least some Democrats see the folly of destroying the economy in order to save it, and are instead offering constructive policy proposals. New York Sen. Charles Schumer, who come January will be one of the senior majority members on the Senate Finance Committee, and Massachusetts Rep. Barney Frank, who will soon chair the House Financial Services Committee, both say that to save U.S. jobs, the 2002 Sarbanes-Oxley accounting reform law must be fixed. The measure was passed with the best of intentions: to end the wave of corporate scandals that cost stockholders billions. But Sarbanes-Oxley failed to strike a proper balance. Compliance costs have soared, taking a heavy toll on smaller firms, some of which now spend more on accounting than research. One unexpected result has been more companies choosing to sell their public shares on foreign exchanges, a development Schumer fears could lead to New York City losing its status as the world's financial hub. Frank and Schumer seem likely to be able to sell a Sarbanes- Oxley fix to fellow Democrats. But Schumer faces a far bigger struggle in finding support for another of his prescriptions for improving U.S. global competitiveness: reducing the staggering litigation costs now borne by U.S. businesses. The U.S. legal system encourages shakedown suits in which entrepreneurial lawyers exaggerate grievances to extract settlements and judgments. The result: Litigation adds more than $230 billion to the cost of doing business each year in the United States. The small businesses that are key to job growth -- and that are less equipped to fend off legal challenges -- bear a particularly large burden. Meanwhile, lawyers fend off tort reform by contributing hundreds of millions of dollars each year to Democratic lawmakers, who pretend that shakedown suits are akin to using the courts to pursue "social justice." If Schumer can persuade fellow Democrats to own up to trial lawyers' real agenda, improve Sarbanes-Oxley and eschew protectionism, we could see true "social justice": a healthier economy with far more middle-class jobs. |
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