Don't go overboard

The lesson offered by the reaction to the last bubble, the Nasdaq-tech stock craze of the late 1990s, and the consequences to our politicians overreaction. Outraged over evidence that many companies lied in their financial statements to prop up stock prices and dupe investors, Congress passed the sweeping Sarbanes-Oxley Act in 2002.

With every passing year, it is more obvious the legislation went much too far, with terrible results for the economy. Extensive internal audits required by the act have proven far costlier than forecast, wiping out profits for many small firms. The added requirements also drove many established foreign companies to stop listing their stocks on U.S. exchanges and prompted a stunning 90 percent drop in startup foreign firms making their initial public offerings here. This led Sen. Charles Schumer – a liberal New York Democrat who is no friend of corporations – to warn the United States' traditional leading role in global financial services in now at risk.

That role could be lost forever if Congress adopts another far-reaching regulatory scheme that imposes unique-to-America costs – this time on banks, traders, exchanges, hedge funds and insurers...

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