Why Gingrich Is Foolish to Back Repeal of Sarbanes-Oxley

Of all the times to push repeal of Sarbanes-Oxley, former Republican stalwart Newt Gingrich and David W. Kralik, director of Internet strategy, have picked the present.

Their recent column comes six years too late and way more than a dollar short. Gingrich and Kralik argue that SOX has failed thusly:

  • It did nothing to prevent recent financial catastrophies of Bear Stearns, Lehman Brothers, American International Group and Merrill Lynch. One small point. Many of the financial derivatives that got these money giants into so much trouble were not regulated by SOX -- they were not regulated at all.
  • SOX implementation has been way too expensive, something 50 times the initial estimate of $91,000 per public firm. True to an extent, but much of that has been fixed and costs have gone down and compliance has gone up. After spending years of anguish getting things right, why repeal?
  • Companies are going public overseas instead of the U.S. Could be, but when one checks into some of the biggest listings, they tend to be state-owned Chinese behemoth companies that are going to go public in China anyway.
  • SOX has dried up venture capital funding in Silicon Valley. I'm not sure what time frame they are referring to, but with the financial crisis, caused in large part because of "no" or "self" regulation, hardly anyone is getting any financing.
Gingrich, former Speaker of the House, was once an effective politican and major conservative power-broker in the 1990s. But hasn't he been reading today's news?