Corporate America: whiny little crybabies
Let's look at two measures that create lots of paperwork. One discourages mega-corporations from ripping off their shareholders (and employees invested in the companies through their 401Ks), and the other is designed to harass and hobble labor unions.
The first is Sarbanes-Oxley. Ever since the law requiring companies to actually tell the truth about their finances was passed, the Chamber of Commerce and its many loyal legislators have been griping about all the paperwork it creates.
Now, after two years of bitching and moaning, there's a piece of legislation working its way through Congress -- bipartisan thanks to perennial sell-out Gregory Meeks (D-NY) -- that will gut Sarbanes-Oxley for all but the biggest firms.
Yesterday's bicameral introduction of a bill to exempt small companies from auditing requirements in the Sarbanes-Oxley corporate-governance law was long in the works, but Republicans looking to put pressure on the Securities and Exchange Commission have now secured bipartisan support."Small companies" as in companies with "$700 million of market capitalization [and] less than $125 million of product revenue." According to an SEC advisory panel, exempting companies with less than $787 million in market capitalization (slightly higher than Congress' plan) would let almost 8 out of 10 publicly traded companies off the hook.
Rep. Gregory Meeks (D-N.Y.) joined [Republicans] to roll out their plan for giving smaller public companies relief. Business groups have lobbied for easing Sarbanes-Oxley's Section 404, which requires outside auditors to approve internal financial controls at all companies, since the law passed in 2002 as a reaction to the Enron and WorldCom scandals.
"We are not gutting Sarbanes-Oxley," said Meeks, who added that he approached the tweaking of Section 404 "not as a Democrat or Republican, but as an American."Gregory Meeks (Corporate Slut-NY).
Sarbanes-Oxley isn't perfect, but any measure lauded by both liberal economists and Alan Greenspan -- and loathed by Milton Friedman -- has to have some merit. If that's not enough, here's a serious study (PDF) showing some of its benefits.
At the same time that the Enron and Worldcom scams that cost tens of billions of dollars were coming to light, there was another scandal that got less attention from the public: the Ullico scandal. In that one, shenanigans cost the insurance company's shareholders about six million dollars. But Ullico had something else going on: it was union-managed. So while the public wasn't that tuned in, it was enough to make the Bush administration suddenly become quite keen on regulation.
Here's what David Sirota says about it in his new book, Hostile Takeover:
In 2004. the White House used the union corruption argument to justify new accounting rules for unions that are so complex and burdensome, many experts believe they were designed solely to usurp unions' time and energy -- and in many cases make them spend triple what they currently do on bookkeeping. According to the Hartford Courant, "virtually every dollar spent by the union, and the time allotted by much of the staff, must find its way onto an expanded U.S. Department of Labor form -- and it must be placed in a category according to what type of activity it represents." The paper added, "It's hard to see how this is anything other than administrative terrorism foisted on working people and their representatives.We all hate paperwork. And some of us have to live with it.