Mitt Romney, just in time for Super Tuesday, says he wants to take us back to that. Well, not in so many words. Romney actually pledged to repeal the Sarbanes-Oxley Act (SOX) — which would leave nothing to prevent another Enron disaster, and almost guarantee a repeat of the scandal.
Mitt Romney pledged during a campaign event Saturday to repeal the Sarbanes-Oxley corporate accounting overhaul.
After Mr. Romney vowed to repeal President Barack Obama’s health care overhaul and the Dodd-Frank financial regulation law, a voter in the crowd asked whether his list of repeals would include Sarbanes-Oxley, as well.
“Yes,” Mr. Romney said. “People who have spent their life in Washington in many cases … don’t understand that when they write a piece of legislation what kind of impact that’s going to have in the private sector, how many people’s lives will be affected by it.”
Mr. Romney’s 59-point economic plan offers a more modest proposal to deal with the law. It includes a line item to amend the law “to relieve mid-size companies from onerous requirements.”
This latest tactical (not ideological) shift pretty much marks the demise of the 59-point plan Romney introduced in September of last year — just six months ago. It’s also the latest stage in the Romney’s metamorphosis from “Massachusetts Moderate” to a candidate now within spitting distance of positioning himself to the right of Rick Santorum and Newt Gingrich. (In fact, with this latest tactical/ideological transformation, Romney has caught up to Gingrich, who said back in December that — with the help of the Republican majorities his supporters will elect to Congress — he would sign the repeal of Sarbanes-Oxley on Inauguration Day.
Let’s back up a minute, and answer the obvious question: What is Sarbanes-Oxley? According to the “Sarbanes-Oxley For Dummies” cheat sheet:
Enacted in the wake of corporate mismanagement and accounting scandals, Sarbanes-Oxley (SOX) offers guidelines and spells out regulations that publicly traded companies must adhere to. Sarbanes-Oxley guidelines offer best-practice principles for any company, especially those providing services to other businesses bound by SOX.
If that’s not clear enough, Wikipedia says that it covers everything from “board responsibilities to criminal penalties, and requires the Securities and Exchange Commission to implement ruling on the requirements to comply with the law.” Basically, SOX brought some standards of governance to “U.S. public company boards, management and public accounting firms,” where the standard-operating-procedure rivaled the mythic lawlessness of the “wild west.”
Seriously. To understand the importance of SOX, you have to first understand that in 2002 it passed the House by a vote of 423 to 3, and passed the Senate by a vote of 99 to 1. In other words, 10 years ago, there was almost no one in Washington, Democrat or Republican, who didn’t want this thing passed. That’s because a spate of “corporate wilding” made clear the need for “a new sheriff in town.”
2002 was the year of the corporate scandal—as company after company was revealed to have claimed “assets” to their stockholders and stakeholders that were actually nothing but vapor. A major corporate reform bill, Sarbanes-Oxley, passed as a result. What have we learned? Not much. Now it’s banks like Citigroup writing down phantom assets. When conservative failures infect the government, it’s always corporations gone wild.
As mentioned before, there was Enron — the big one, credited with giving birth to SOX. In truth, SOX had many corporate criminal fathers, including: Tyco International, Adelphi Communications, Qwest, Peregrine Systems, WorldCom, and lots more. It was a painful birth for countless people who lost their livelihoods, retirement savings, and with them any hope of economic security.
SOX was born to help keep the the one percent from engaging in fiscal shenanigans that wreak havoc on the 99 percent, or at least keep them from getting away with it. And, while it’s not perfect, SOX works.
Cast your mind back. The scandals erupted in some of the purportedly best, most recognizable companies in America. Enron and WorldCom were the two biggest names and the two biggest failures. Tyco and Adelphia were in the second tier. But there were appalling accounting disgraces at HealthSouth, Rite Aid and Sunbeam. Waste Management and Xerox barely survived theirs.
Today, there are certainly debates about stocks and their valuations — and some questionable accounting — but no company that finds itself under scrutiny now is anywhere near as large, respected or publicized as those were then.
Something else characterized those dark days: the frauds often lasted and lasted. Investors known as short-sellers, who make money when stocks collapse, waged battles for years over certain companies. Today, accounting disputes are finished before they start. An accounting scandal at Groupon, the online thecorsetcenter.comThe main criticisms of the law haven’t panned out. Corporate earnings have soared, and no company has ever missed a quarterly estimate because it was spending too much on its accounting and internal controls.
Critics railed that it would cost small companies too much, which it may have, though the evidence is debated. They also argued that it would hurt initial public offerings, which it didn’t. Yet, there remains vestigial criticism from the right; Newt Gingrich called for its repeal the other day on the campaign trail.
That, of course, explains why conservatives want to do away with it. It amounts to a return to the “bad old days” because, as with health care and financial reform, conservatives are long on “repeal” rhetoric and short on solutions that will “replace” the reforms they want to erase, and address the problems that revealed the need for and gave rise to those reforms.
That’s because there are some problems conservatives don’t want to solve, don’t believe should be solved, and don’t even recognize as problems in the first place. In the conservative mind, corporate wilding that costs hard-working Americans their livelihoods and their retirement “nest eggs” isn’t the problem. Reforms that prohibit corporate executives from engaging in fraud and theft to further line their pockets at the expense of the other 99 percent is a huge problem.
Whether Mitt Romney believes this or not is anybody guess. Mitt Romney believes he should be president. Thus Romney’s pandering grows more obvious with each passing day. He says whatever he thinks he needs to say to get his party’s nomination, and thus get his shot at the Oval Office.
Even many Republicans don’t care if he believes it nor not. As Grover Norquist says, at bare minimum they need a president with opposable thumbs, who can hold a pen and sign what they pass. Thus it matters to the rest us, whether Romney believes it or not, if elected conservatives will expect him to practice what he pandered to get elected, and put his name on whatever they pass.
So, if conservatives manage to repeal Sarbanes-Oxley, President Romney will sign it if he wants to keep his job. And the days of Enron will be upon us once more.