How Not to Re-Regulate Corporations

Last I week, I posted a critique of the call to repeal Sarbanes Oxley by former Republican House Speaker Next Gingrich and high tech executive David W. Kralik.
That drew several comments supporting my points or stating that Newt and his colleague have good ideas. Drawing from them, here are some suggestions about how to proceed with corrrective regulation after the financial meltdown:

• Don't throw the baby out with the bathwater. SOX was a response to the last round of corporate scandals including Enron and WorldCom that featured dodgy accounting and lots of C-Suite hubris. It is true that early versions of SOX went overboard in micro-managing firms. If a Democratic Congress and Obama rush in with regulation for the sake of it, we'll spend years undoing the damage, a la SOX.
• Protect innocent, small firms. The SOX-scandal firms were big deals with tons of paper assets and glitzy headquarters buildings. Yet, when corrective measures came, small firms that had absolutely nothing to do with such scams were unfairly burdened with extra accounting overhead costs required by SOX. This time around, it is the Wall Street giants and big regionals like WaMu and Wachovia that are the perps, not your local thrifts or community banks. When new financial regs are written, don't put the screws to innocent locals.
• Regulation is a normal fact of life. We have bought into years of neocon theory that regulation is evil. Believe it or not, it started with Jimmy Carter, who deregulated the airlines. We went through the Reagan-Thatcher, get-the-government-off-our-back years, followed my a similar riff from Bill Clinton and then eight years of utter incompetence and dreamy "self-regulation." But there is a role for regulation. Always was and always will be. Don't believe me? Go read investigative crusader Ira Tarbell who did the job on Standard Oil more the a century ago. We need more Tarbells and fewer hedge fund managers.