Nov 15 2006
By Mary Orndorff
Sen. Richard Shelby, concerned that more public companies are avoiding American capital markets because the 4-year-old corporate governance law is too burdensome, said Tuesday that Congress may not be willing to loosen the law's grip and could instead leave the issue to the Securities and Exchange Commission.
Shelby, the outgoing chairman of the Senate banking committee, initially supported the sweeping Sarbanes-Oxley law to combat corporate fraud but now believes it is chasing new business away from Wall Street and into friendlier regulatory territory like London.
"It was passed in the heat of a lot of corporate scandals and accounting scandals and I supported it. But it's like any piece of legislation that is far reaching - a lot of times you don't know the cost and the consequences," Shelby said Tuesday in an interview on Capitol Hill.
Shelby, an Alabama Republican, said he thinks portions of the law should be "tweaked" but not fully repealed. The law, named for its two congressional sponsors, passed after massive fraud was uncovered at companies such as Enron and WorldCom.
"I don't think we ought to water down anything that is working, but we ought to look at the root causes as to why we're losing out to London right now," Shelby said. "That is not a good trend. If Sarbanes-Oxley is part and parcel of that, that should first be a concern of the SEC and then us, working with the SEC."
Although some leading Democrats agree with Shelby that the law is too onerous and expensive, Shelby's replacement on the Senate committee was skeptical. Sen. Christopher Dodd, D-Conn., told reporters Tuesday morning that he was willing to listen to the concerns of the business community about the extra costs of auditors and lawyers to stay in compliance.
"But I'm not quite as convinced as others are that this is as big of a problem associated with Sarbanes-Oxley as some have suggested," Dodd said.
Shelby, sensing that legislation to weaken portions of the law may not pass a closely divided Senate, expected further congressional hearings next year.
"I have held oversight hearings on Sarbanes-Oxley each year and Senator Dodd will do this, too, because we want to see, is it something we need to do legislatively to tweak, or is it something the SEC can do administratively by rule?" Shelby said. "I think we would be foolish to try to do something rash on Sarbanes-Oxley that would probably go nowhere and secondly without the input of the SEC."
Dodd and Shelby had breakfast together Tuesday at the Capitol and said afterward they plan to cooperate on the committee's agenda next year. Dodd called Shelby his "good friend," and said Shelby was known for working with Democrats to "get things done."
"We'll be working together to do what we can to see to it in our areas of responsibility that we have cooperation where we can," Dodd said. "Where there are differences, we articulate those, but never let it separate us in our efforts to work together on behalf of the people of this country."
Shelby also said the chances of passing federal flood insurance reform by the end of the year were slim, but that the committee would try again next year. The panel passed a bill to make the program more financially sound by increasing premiums and ending subsidies for homes that are repeatedly damaged, but it stalled on the floor.