- The Washington Times - Tuesday, March 13, 2007


Billionaire Warren Buffett said the “capitalist system” is doing fine under current financial regulations, thank you very much. Former Federal Reserve chief Alan Greenspan called for focusing on fraud that erodes the market.

The secretary of the Treasury Department and the chairman of the Securities and Exchange Commission had their say, too, as did the people who run Wall Street and corporate America and others who used to regulate the markets. It was all part of a day of public brainstorming.

In informal exchanges as they sat onstage in an ornate auditorium at Georgetown University, calling each other by first names, the titans of industry and finance discussed whether U.S. financial markets are losing their competitive edge under the burden of post-Enron regulations.

It was part live talk show, part celebrity wonk session — sort of a mini-Davos, the annual Swiss Alpine gathering of the world’s rich and powerful for spirited problem-solving. Robust applause welled from the audience at several points.

Treasury Secretary Henry M. Paulson Jr. came up with the idea of holding the conference last year, as an array of business leaders were insisting the corporate scandals of 2002 spawned overly burdensome and costly rules that have hurt U.S. competitiveness. He and SEC Chairman Christopher Cox, a former Republican congressman from California, were the moderators.

The public discussions were followed by private meetings of 40 to 50 people, giving business leaders, union pension activists and others an unusual opportunity to meet closely with high-level administration officials.

Mr. Paulson said a balance must be struck between ensuring the competitiveness of financial markets and protecting investors.

“We will soon issue a plan for moving forward on these issues, with the goal of making significant progress this year on generating concrete proposals,” he said at the close of the daylong meeting. “This is a high priority for me.”

Treasury will work with the regulatory agencies on immediate and longer-term actions, Mr. Paulson said.

Some business-friendly Democrats in power positions in Congress have indicated they would prefer changes to be made with the scalpel of regulations by the SEC and other agencies, rather than the cudgel of legislation.

“The rise and fall of America” may well be charted by the shareholder litigation that has become a wave unjustly imperiling companies, suggested James Dimon, chairman and CEO of JPMorgan Chase & Co.

With corporate profits at a record high, Mr. Buffett said, excessive regulation doesn’t appear to have hampered business growth.

“That cannot be regarded as a broken capitalist system,” said the investor-philanthropist. “I think American business will be very ingenious with learning to cope with anything that comes its way.”

Other participants included General Electric Chairman Jeffrey Immelt, brokerage founder and CEO Charles Schwab, former Treasury Secretary Robert E. Rubin and New York Mayor Michael R. Bloomberg.

In November, a committee of business, legal and academic figures offered proposals to claw back corporate governance rules, class-action lawsuits against companies and auditors, and criminal prosecution of companies by the government.

Also warning against a dismantling of regulations was former SEC Chairman Arthur Levitt, saying the United States can no longer expect to exercise “total primacy” in world markets.

It would be a mistake to eliminate “the fundamental protections that made our market great,” he said.

A second group, formed by the U.S. Chamber of Commerce, issued a report this week calling for “quick and decisive adjustments in the U.S. legal and regulatory framework.” Among its key recommendations: Public companies should stop issuing quarterly earnings guidance and policy-makers should consider proposals to reduce the liability of accounting firms in litigation over company audits.

A target of the business campaign is the corporate financial-controls provision of the Sarbanes-Oxley anti-fraud law, enacted in 2002 at the height of the scandals that engulfed Enron Corp., WorldCom Inc. and other big corporations.

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