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Daschle on SOX: Then and Now

On Friday, June 28, 2002, as reported in 148 Cong Rec S 6297, then-Senate Majority Leader Tom Daschle stated:

... the growing list of corporations under question makes clear that we aren't just talking about one or two isolated cases, or rogue executives.

The problem, instead, is a "climate"-a deregulatory, permissive atmosphere that has relied too much on corporate America to police itself. It is as if the line between right and wrong, legal and illegal, acceptable and unacceptable was so little enforced that it became blurred. Bringing it back into focus-as Enron's collapse did-revealed more than a few businesses standing on the wrong side.

The evidence rolling in is now unambiguous. Self-policing is no replacement for a vigilant cop on the beat. It is time to reform and strengthen the system. ...

Senator Sarbanes has done a masterful job in moving it [i.e., Sarbanes-Oxley] through committee with broad bipartisan support.

That was then. This is now, when he is in private legal/lobbying practice (from an articleon today's WSJ$ op-ed page that Daschle and Bob Dole (!) co-authored):

... SOX has also had unintended consequences that generate complaints from small and mid-sized capitalization companies who say that their access to capital from publicly-traded stock markets has been made prohibitively expensive.

... changes to SOX may come in the form of revisions to SEC regulations or, if necessary, new legislation. When Congressional hearings or regulatory review take place, there are likely to be a range of good ideas about how to achieve public protection and lower costs.

What was it Emerson said about consistency? (That's a rhetorical question, I know what he said)

It would have been nice if Senator Daschle had pondered the law of unintended consequences back in 2002, when Congress was rushing SOX through the legislative process with essentially zero regard for costs or nuance. As Texas Congressman Ron Paul aptly observes:

Sarbanes-Oxley was rushed into law in the hysterical atmosphere surrounding the Enron and WorldCom bankruptcies, by a Congress more concerned with doing something than doing the right thing.  Today, American businesses, workers, and investors are suffering because Congress was so eager to appear “tough on corporate crime.” Sarbanes-Oxley imposes costly new regulations on the financial services industry. These regulations are damaging American capital markets by providing an incentive for small US firms and foreign firms to deregister from US stock exchanges.

Daschle owes us not just a call for reform, but an apology for having rammed the law through in the first place.