A Republican who backs marketplace regulations might seem paradoxical -- but Michael Oxley, ex-GOP representative, co-authored the sweeping 2002 Sarbanes-Oxley Act. Does the former chairman of the House Financial Services Committee still approve of "SarBox"? He gave his views, on "Power Lunch."
Oxley said that corporate scandals like those at Enron and WorldCom shook investor faith and were "bad for markets, bad for business." The public called for action to prevent such frauds and bankruptcies in the futures, he said, so drafting SarBox was not only necessary, but good for business.
Five years hence, many firms -- especially small ones that lack vast resources -- complain that the regulations make it difficult, if not impossible, to do business. CNBC's Bill Griffeth cited a drop in U.S. initial public offerings and pointed to stats hinting that London may be replacing New York City as the world's financial capital. He asked Oxley whether SarBox might be to blame.
The ex-legislator, now a partner at Baker Hostetler, rebuffed the idea: Oxley said that the drop in American IPOs is due to a combination of factors: Just as "steel is global" nowadays, so "capital is global," he said -- and it's not U.S. losses, but "maturing markets" in London and Hong Kong, which have changed the playing field.
He declared that Sarbanes-Oxley hasn't dragged down the U.S. investment environment, but rather "aligns [America] with the rest of the world" -- as other countries have enacted similar regulations to reassure investors, "in line with the U.S."
Oxley's final argument in favor of keeping SarBox: "The Dow was above 7,000 when Bush signed the bill" into law; "now it's over 12,000."