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Leaders to consider call to revamp business rules

By ASSOCIATED PRESS
Published March 13, 2007

WASHINGTON - A gathering of influential figures convened by Treasury Secretary Henry Paulson to discuss the impact on business of laws and rules born of the 2002 corporate scandals likely will produce some ideas that could quickly be turned into policy changes, a top administration official said Monday.

Robert Steel, the Treasury undersecretary for domestic finance, spoke to reporters Monday about a conference being held in Washington today that is expected to provide a serious hearing to the monthslong campaign by business interests for a softening of the regulations.

An array of companies and business leaders have been making the case that the requirements spawned by the crisis of corporate malfeasance are overly onerous and costly - and hurt the competitiveness of U.S. financial markets by driving some companies away from them.

"Our plan here is to bring together a very diverse group of people," Steel said, making it impossible to predetermine the outcome. "If you wanted to, I don't think you could prebake it," he said.

Paulson and Christopher Cox, the chairman of the Securities and Exchange Commission, are moderators for panel discussions. The panelists include billionaire investor Warren Buffett, General Electric Co. chairman Jeffrey Immelt, brokerage founder and CEO Charles Schwab, former Federal Reserve Chairman Alan Greenspan and New York Mayor Michael Bloomberg.

While the conference likely will yield some proposals that are "actionable and more immediate," others will lay groundwork for possible longer-term action, Steel said.

In November, a committee of business, legal and academic figures offered proposals to clip back corporate governance rules, class-action lawsuits against companies and auditors, and criminal prosecution of companies by the government.

A second group, formed by the U.S. Chamber of Commerce, is unveiling its report and recommendations this week.

It calls for "quick and decisive adjustments in the U.S. legal and regulatory framework ... to ensure that U.S. investor and business interests are best served in the global marketplace." Among its key recommendations: Public companies should stop issuing quarterly earnings guidance and policymakers should seriously consider proposals to reduce the liability of accounting firms in litigation over company audits.

Some experts, including Lynn Turner, a former SEC chief accountant, have warned against a softening of the rules, saying that would erode investor protection.

In December, culminating an intense monthslong lobbying campaign by a companies, the SEC tentatively adopted a plan giving corporate managers more flexibility in assessing the strength of internal financial controls under the Sarbanes-Oxley law.

The internal-controls provision of the sweeping antifraud law, enacted in 2002 at the height of the scandals that engulfed Enron Corp., WorldCom Inc. and other big corporations, is a key target of the business push against regulations. Companies have complained to the SEC that the rules are overly burdensome and costly, especially for smaller businesses.

[Last modified March 13, 2007, 02:14:54]