The Business of Keeping Business Competitive
Tuesday, March 13, 2007SUSIE GHARIB: While investors were selling off stocks on Wall Street, in Washington, business leaders were sounding off about how to keep America's financial markets competitive. Treasury Secretary Henry Paulson hosted the panel which heard from the cream of the crop of the nation's CEOs. At issue, the Sarbanes-Oxley Act and whether the increased regulation it requires puts U.S. companies at a disadvantage. Stephanie Dhue reports.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Treasury Secretary Henry Paulson told the panel the goal is to balance investor protection and market competitiveness.
HENRY PAULSON, TREASURY SECRETARY: A balance that assures investors the system is sound and trustworthy and also gives companies the flexibility to compete, innovate and respond to changes in the global economy.
DHUE: The Sarbanes-Oxley rules governing financial reporting are a key concern for business. Legendary investor Warren Buffett joked that, as a user of financial information, he can't get enough.
WARREN BUFFETT, CHAIRMAN & CEO, BERKSHIRE HATHAWAY INC.: As a user, of course, I've got an enthusiasm for reading reports that's a little like a teenager has for reading "playboy", so I'm -- at 76, you've got to get excited about something.
DHUE: Kidding aside, Berkshire Hathaway spent $24 million in audit fees last year to prepare its financial reports. Buffett is clearly less enthusiastic about that.
BUFFETT: We're doing a lot of things that I regard as unnecessary.
DHUE: Buffett noted that corporate boards are distracted with regulatory compliance, a message echoed by General Electric's Jeffrey Immelt. He says boards are no longer comforted by independent auditors.
JEFFREY IMMELT, CHAIRMAN & CEO, GENERAL ELECTRIC COMPANY: I'm not here today to whine or complain or cry about regulation. What I would say is that there's been an unintended consequence -- I don't think anybody ever intended this to be the case -- that says that a group that has historically played a very strong role, a pro-investor role, has been largely discounted in a system that is just too gosh darn complex.
DHUE: Complex regulations have been blamed for the decline in companies listing stocks in the U.S. Last year, only two of the top 10 global initial public offerings were handled by a U.S. exchange. But SEC Chairman Chris Cox says that trend is driven by other factors.
CHRISTOPHER COX, CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION: Whatever the regulatory climate in the United States, we just live in a more competitive world when it comes to capital markets. Issuers can list in their home countries. They don't have to go overseas to list now.
DHUE: The SEC expects to scale back internal accounting rules for public companies by the summer. But regulators say keeping U.S. markets competitive will be a long-term focus. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
