When a domestic industry is having problems with foreign competitors, foreign-owned companies in the US, or outsourcing, there is usually plenty of media coverage.
But when an entire sector of the financial services industry is in jeopardy, namely the issuance of shares in companies going public for the first time (initial public offerings, or IPOs), the news and commentary can't seem to break out of the business-reporting realm.
Read the following, and then I'll attempt to explain why.
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LONDON AND HONG KONG "HEART" SARBANES-OXLEY
Sarbanes-Oxley Quotes of the Day: Kudlow Discussion Group and John Fund Column
If people won't listen to the US business and investing communities about the negative impact of Sarbanes-Oxley, maybe they'll take note of the unconcealed glee overseas.
Here's one example from Larry Kudlow's show last Thursday (posted at his blog on Friday), on the post-SarBox IPO (initial public offering) dry-up (bold is mine):
Mike Holland: I'd like to put a fact in here. Before Sarbanes-Oxley, 50 percent of all IPOs around the world listed in the United States. Would anyone, including Herb, like to guess how many since Sarbanes-Oxley have listed in the U.S.?
Herb Greenberg: Give me the number.
Mike Holland: It's 8 percent. And the last 25 largest IPOs, they all listed abroad. I was in Europe a couple weeks ago--they're talking about erecting statues to Sarbanes and Oxley in London's financial center.
Kudlow: Yes. Absolutely. ..... That's what people don't understand. We're going to lose competitiveness.
John Fund, at today's OpinionJournal.com, notes Hong Kong's gratitude for SarBox (bolds are mine):
Increasingly, Hong Kong and London are the places where companies are finding it easier and cheaper to list their shares and raise capital. Last year, of the 25 largest initial public offerings in the world, only one took place in America. This year, Hong Kong is likely to end up as the No. 1 market for stock offerings world-wide.
Perhaps the top culprit in New York's relative decline as a trading center is the Sarbanes-Oxley corporate accountability rules that were put in place in 2002 in the wake of the Enron and WorldCom scandals. Henry Tang, Hong Kong's financial secretary, couldn't be more blunt on the good fortune Sarbanes-Oxley has brought his city. "Our success is giving [Treasury Secretary] Hank Paulson a few raised eyebrows," he told a delegation from the Fraser Institute, a Canadian free-market think tank, last week. "Thank you, Mr. Sarbanes and Mr. Oxley," he said, referring to Democratic Sen. Paul Sarbanes and GOP Rep. Mike Oxley, the law's chief sponsors.
..... Our foreign competitors ..... are taking advantage of our curious refusal to reform our financial markets, which could make the U.S. a global also-ran. As one leading Hong Kong businessman told me, "Your current policies amount to unilateral disarmament in the contest for IPO's. The next year or so will be a test for whether you can wake up in time."
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Are we really going to cede an entire sector of the financial services industry to overseas competitors without a fight because of a bunch of unnecessary busywork? And why isn't this situation getting any press coverage beyond the business pages?
I believe it stems from an inherent love of government regulation, and a related hostility to rolling back any kind of government regulation, no matter how demonstrably harmful it is, especially if the regulatory rollback appears as if it will in any way "benefit" businesses (i.e., punish them less).
Even the average non-financial person, if they knew the situation, would recognize that there is a problem when US companies going public are mostly doing so overseas. The press would rather they continue to be ignorant.
The original post on SarBox is at BizzyBlog.com. Media bias-related commentary was added here.
