The Cost of Sarbanes-Oxley: Ron Paul Q & A
Whatever your opinion about the iconoclastic Congressman Ron Paul (R) of Texas and his recent run for President – and he seems to draw both fanatical followers and detractors – one thing everyone agrees on is Paul has always been one of the most single-minded opponents of the controversial Sarbanes-Oxley Act.
Some background: on April 14, 2005, Ron Paul introduced a bill into the U.S. House of Representatives called “The Due Process and Economic Competitiveness Restoration Act,” which would have meant the complete repeal of SOX. In an impassioned speech before Congress, Paul described SOX using such incendiary phrases as “an obvious sop to auditors and accounting firms,” “more typical of police states than free societies,” “unconstitutional,” and “retarding economic growth.”
The bill went nowhere fast. But it made Paul something of a hero to beleagured businesspeople everywhere as they struggle under the paperwork and expense of Sarbanes-Oxley.
Now, as the cost of Sarbanes-Oxley – which was originally designed to spare the public the costs of corporate corruption – approaches $200 billion in lost corporate profits, Edgelings decided to contact Rep. Paul for his latest thoughts on his legislative bête noir.
Though the Due Process and Economic Competitiveness Restoration Act failed to pass, opposition to Sarbanes-Oxley remains as high as ever, especially in the tech community. We asked Paul if he saw any legislation in the pipeline to either repeal or amend Sox? “No,” he replied. To his dismay, “No legislative action is likely this year.”
Well, we asked, without legislative action pending, for victimized corporations is the best recourse now to take their case to the courts? This drew an angry response from Paul: “Ideally, since Congress created the problem, Congress should do the right thing and repeal it. However, until it does that, those that are harmed by the unconstitutional legislation have little choice but to depend on the courts for checks and balances, and some relief.”
But, we asked, haven’t the intervening years proven the need for shareholder protection from corrupt corporations? After all, we said, look at the recent government bail-outs of mismanaged enterprises. On the contrary, Congressman Paul replied, “The fact that Bear Stearns, Fannie, and Freddie were bailed out is proof that SOX failed to act as the safeguard against corporate failures it was intended to be.” Indeed, he added, “All it takes to keep from bailing out failed companies is 218 Congressmen voting against a bailout, not another piece of poorly thought-out interventionist legislation [created] simply because Congress felt the need to act in some way.”
But, we asked, isn’t there anything positive about Sarbanes-Oxley bill that should be retained even if the rest of the bill is amended or repealed?
To that suggestion, Ron Paul had a one word answer: “No.”