Everyone Makes Mistakes

Why is it so hard for politicians to admit a mistake? After the Enron and WorldCom debacles, the knee jerk reaction by Congress was the Sarbanes-Oxley Act. While the intent was to eliminate fraud, there is evidence that it is hurting the venture capital industry and doing more harm that good in other areas. It now takes around 12 years to enter the capital market when it used to take 5 years. That's because, it is more difficult to raise the 4.36 million in hidden taxes in yearly compliance costs. Originally, the cost was estimated at around $91,000. Big difference.

It created personal criminal responsibilities for board members. This narrowed the number of well qualified board members willing to accept the personal responsibilities. Many smaller companies reverted back to private status or merged to lower costs. It also made it more probable companies that considered going public would do so in London rather than anywhere in the United States. Sarbanes -Oxley created massive amounts of paperwork and bureaucracy. Those companies that complied fully were the ones who lead the financial breakdown in the investment banks in 2008.

Oxley, who retired in January after 25 years in Congress said that he would have written it differently and he believes Sarbanes would as well. Everyone felt the urgency that something must be done. "Everyone felt like Rome was burning." He said it was like nothing he had seen in his 25 years in Congress.

It is time to repeal Sarbanes-Oxley. If other laws are needed, they should take the time to do them correctly. We can not afford anymore damage to our economy.