Wednesday, March 14, 2007
The talk today is all about what was said at Treasury Secretary Paulson's Capital Market Conference yesterday, and from the press reports it appears that there was more debate over the current state of Wall St. than might have been anticipated. Paulson urged consideration of a more principles-based regulatory system, while former SEC Chair Arthur Levitt said he was "really impatient" with calls to import the the British system of oversight. Levitt also called the conclusions of recent studies that the US capital markets were losing their competitive edge "specious." Warren Buffett noted that corporate profits were up and "That cannot be regarded as a broken capitalistic system." Other panelists debated the costs and benefits of SOX's CEO and CFO certification requirement and section 404 internal controls. Predictably, a panel of corporate executives blamed lawyers for bringing frivolous lawsuits, and Paulson asked "whether the legal system appropriately protected American investors or gave latitude to unscrupulous lawyers." Ann Yerger from the Council of Institutional Investors, however, observed that the number of private lawsuits are down.
All agreed that it would be difficult to accomplish legislative reform in the current political climate. After the public sessions, the participants met privately to discuss three areas —regulation, corporate accounting and corporate governance and legal liability issues. See WPost, Wall Street, Washington Huddle on U.S. Markets; NYTimes, Paulson, at Talks on Regulation, Suggests Pendulum Has Swung Too Far ; WSJ,A Summit on U.S. Rules:'Too Gosh-Darn Complex.'