"New Democrats" Are At it Again.

According to this report from Huffpost, two Democrats will offer amendments to Sarbanes-Oxley Act to weaken it. John Adler and Carolyn Maloney are the guilty parties.

Sarbanes-Oxley was passed as a response to Enron, Worldcom and other past accounting scandals. It applies to publicly traded companies. The purpose was to restore some level of credibility to publicly disclosed information particularly financial statements. It requires a third-party audit of internal reporting controls.

But I guess that is too much for these two Democrats. First, Adler's potential amendment:

Adler, a member of the pro-business New Democrat Coalition, is proposing to exempt publicly-traded firms with market capitalization less than $700 million from a provision of Sarbanes-Oxley mandating an external audit of the firm.

Specifically, Adler's provision calls for "less stringent requirements" for these firms, and would require the Securities and Exchange Commission -- the federal watchdog overseeing the capital markets -- to develop rules that would ease the "burden" on these firms. But until the SEC developed those rules, firms worth less than $700 million would be completely exempt from mandated external audits.

Check this complete bullshit justification for this amendment (from spokesperson for Rep. Adler):

Congressman Adler's amendment will exempt small businesses from cost prohibitive regulations. Small businesses are the backbone of our local economies and this necessary reform will help keep and create jobs for hard working Americans."

What fu*cking small business are they talking about? When it comes to small business publicly traded companies certainly don't come to mind particularly ones with less than $700 million market cap.

I like this quote from a former high ranking SEC official:

"What Adler is really doing is dialing for dollars," said Lynn E. Turner, chief accountant for the SEC from 1998 to 2001. "He's got a job that he wants to keep, and he has to run for that job every two years. So this is probably a strong indication that Adler couldn't care less about investors, and cares much more about getting the money so he can keep his job."

Now for Maloney's amendment:

Maloney's amendment, co-sponsored with Rep. Scott Garrett, a New Jersey Republican, would exempt from the independent audit requirement entirely those publicly-traded firms with market capitalization less than $75 million.

Amazing. I am sure she would try to use the small business excuse as well. This despite a SEC study that shows the cost of complying with Sarbanes goes down after the first year of compliance.

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"small business"

That is most amusing. Most small businesses are not traded on public exchanges too.

I guess even the corporate lobbyists are running low on spin and writing press releases for their bought and paid for Congress Reps.

One battle at a time

Well, Well. Obama Administration is the culprit

We are talking about publicly traded companies when it comes to Sarbanes Oxley and by becoming a publicly traded company there are certain costs that must be incurred to do so - particularly compliance with securities regulation. Well, it turns out that Emanuel may be "quietly" pushing Maloney's Amendment:

The White House is quietly working to undercut a key post-Enron reform, significantly weakening protection for everyday investors and threatening the administration's image as a champion for financial regulatory reform.

White House Chief of Staff Rahm Emanuel has been telling Democratic members of the House Financial Services Committee that he supports amending the Investor Protection Act of 2009 -- a bill designed to beef up protection for investors -- in order to exempt small businesses from a requirement in the Sarbanes-Oxley Act that mandates audits of internal controls. The Sarbanes-Oxley Act was enacted in 2002 in the wake of accounting scandals at Enron and Worldcom that rocked investors and damaged confidence in the markets.

Check this quote out from the article:

"Democrats like to talk a lot about how the deregulatory Bush Administration caused the financial crisis. I'm frankly having a hard time understanding why some of those same Democrats are lending their support to legislation that would weaken protections against accounting fraud even more than Christopher Cox's SEC was willing to do," said Barbara Roper, director of investor protection at the Consumer Federation of America, in a reference to the much-maligned former SEC chairman under the previous administration. "And [the Obama administration] wonder[s] why people question their credibility as financial reformers?"

These are NOT "mom and pop" shops as the article says.

RebelCapitalist.com - Financial Information for the Rest of Us.

Ratigan is calling to fire Geithner


We need a FDR and instead we've got .....corporate lobbyists getting whatever they want.

One thing about the Great Depression is it created a society where people cared about their neighbors. They had a sense of community, of society, of being an American, of patriotism.

Instead we have corporate lobbyists just running amok, all the way to the White House and we cannot even get basic financial reform.

I think FDR had reforms passed in the 1st 100 days and considering the gravity of this financial implosion, this is purely disgusting what is going on with the lack of financial reforms.

The Agenda

Robert, you expect too much. Obama just wants things to return to how they were before this mess. Thus they are macro-tinkering, "albeit at a lower level." The place has been looted. The Obama folks just want to put all the furniture back in place and hope the burglars did not find all the credit cards and silverware. No need to call the cops, we'll just pay the mob for "protection."
FDR knew how to rally the American peoploe and ask them to unite in common struggle. He believed in what he was doing. Somehow, I do not get the feeling Obama has that conviction. I voted for him, but then I voted for Carter too.
Frank T.

Frank T.

I agree with you Frank T.

That said, EP is a place to shout out and gain public support for sane, smart policy. I personally think the economic blogs are the reason we have discord on financial reform and it isn't a pure steam roll. So, it's up to us to point to some good policies.

It's confirmed: Obama Administration Guts Post-Enron Reforms

In a follow-up story from yesterday - Huffpost confirms that it was the Obama Administration and more specifically Rahm Emanuel who blessed the gutting of Sarbanes Oxley:

Rep. John Adler, a New Jersey Democrat who supports the amendment, also chimed in that the White House and Treasury Department back the repeal.

That prompted Rep. Paul Kanjorski (D., Pa.), who said a permanent exemption would be a "bad day for the American investor," to ask Adler to identify the administration folks with whom he had talked.

Adler said he discussed the matter three times with White House Chief of Staff Rahm Emanuel.

This is sad. According to Huffpost article that means more than half of publicly traded companies will be exempt from Sarbanes Oxley.

RebelCapitalist.com - Financial Information for the Rest of Us.

voice vote

Good God, they even had a committee voice vote so they individually do not have to be recorded?

Pretty incredible and at least HuffPo is making this front and center to show the Obama administration just did corporate lobbyist's bidding.