Apparently I am not alone in the skepticism I expressed last week concerning an oped by Sen. Chuck Schumer (D-NY) and New York City mayor Michael Bloomberg, in which the duo decries the ill effects of regulation and frivolous lawsuits on New York’s financial services sector. Four of the five letters to the editor in today’s Wall Street Journal expressed incredulity that these two pols could possibly expect to be taken seriously on the subject, given their otherwise steadfast support for government intrusion into our lives.
I don’t know the newspaper business, but I have an inkling the WSJ ran their piece not so much for the good ideas it contained, but because it knew that the juxtaposition of those ideas with that by-line would elicit a spankfest from its readership that would lend itself to today’s title of the Letters to the Editor section: ”Schumer and Bloomberg Are For Less Regulation? Is This a Joke? (sorry, subscription required).
There was one letter, however, that actually defends Sarbanes-Oxley and the huge regulatory burdens imposed upon financial services firms operating in New York because it “gives our New York financial market a distinct competitive advantage [relative to London].” Come again? Yes, this letter argues that, ”while it is quite true that there are more regulatory bodies and higher fines in New York than overseas, that is only a temporary situation.” The author argues not that those U.S. regulations will be relaxed, but that the regulatory burden on firms operating in the London market will be just as heavy in the future, and that New York firms are lucky to have a head start on the learning curve.
To put this all in context, the author of the pro-regulation letter is a vice president at Orchestria Corporation (a New York company), which is an entity that “helps companies achieve compliance and good governance through electronic communication control.” Orchestria is in the business of helping it’s customers “to efficiently manage the burden of regulation and ensure compliance.” In other words, Orchestria (and probably hundreds of companies like it) is the Frankenstein of Sarbanes-Oxley. Although people like Schumer and Bloomberg are recognizing rhetorically the damage caused by regulatory overkill, righting the ship will be more difficult than just publishing an oped.
Sarbanes-Oxley has created a whole new industry that benefits from the status quo. I wonder if they know any politicians who would enjoy their financial support.