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Michael Oxley's Next Act


By Maria Bartiromo Michael Oxley is best known as the co-author of the Sarbanes-Oxley Act, the 2002 law that set new standards of accountability for company boards, management, and accounting firms—and led business to bemoan the financial burdens of compliance. Now the former Ohio congressman is working to win over business as NASDAQ's nonexecutive vice-chairman. He'll work with CEO Robert Greifeld and will try to entice companies to list on the exchange. I caught up with Oxley to talk about SarbOx, private equity, and American competitiveness.

Tell me what your role at NASDAQ will be and what you're expecting to accomplish.

I will be advising Bob Greifeld and the board on public policy issues, and I'll be meeting with a lot of the listed company CEOs and CFOs throughout the country. I'll try to better explain to the listed company members the role that Washington plays for good and for bad, and to develop some ideas [to] better serve them.

What can be done to reclaim financial-services business lost to overseas markets?

Well, first of all, I think [the problem] is a bit overstated. I don't think we could expect to be a monopoly forever. There are going to be more competitors. We just have to be better at it. I haven't talked to a CEO yet who doesn't relish the opportunity to be competitive in the global marketplace and go after that kind of business.

Do you worry about your reputation as an architect of Sarbanes-Oxley, a law many in business have complained about? Will that be a hindrance in terms of getting new business listings on NASDAQ?

Oh, I don't think so. I think there's a lot of misinformation about the law. Some changes in Section 404 [which requires companies to produce an annual internal-control report] will be very positive for the business community.

What kinds of changes to 404 might we expect?

You're going to see not a one-size-fits-all but a more tailored approach affecting the smaller companies. You're going to see some commonsense proposals coming out of the Securities & Exchange Commission and the Public Company Accounting Oversight Board that will have the effect of bringing a lot of the excess costs out of the system, but maintaining the integrity of the system and protecting the investors at the same time.

But large companies also have complained about 404. In restrospect, was that section too harsh and costly for business?

I think 404 has obviously proved to be much more expensive than anticipated, and I think everybody agrees with that, and that's why the flexibility we put into the law allows the SEC and the PCAOB to make some of those changes. For example, their proposals will put much more of an emphasis on the internal audit as opposed to the external audit. You can make a good argument that most of the costs have been because of the external audit.

What are your thoughts on the private equity boom? Do you think we need to see heavier regulation?

No, I don't. I think private equity plays an enormous role in our economy that is somewhat misunderstood. Whether they're hedge funds or private equity concerns, they do a real service. In many cases, private equity firms take a company private, fix it up, dress it up, and put it back on the market for an IPO. We have enormous capital there that is almost uniquely American. If we were to regulate, say, the hedge funds, you would have to increase the budget of the SEC something like tenfold. It's rather unrealistic.

How worried are you about the subprime mortgage fallout? Do you think we could enter recession at some point this year ?

It's always possible. But I don't think it's going to be driven by the subprime mortgage meltdown. The indication is it's a relatively small percentage in the overall housing mortgage industry and an even smaller portion of the overall economy.

Maria Bartiromo is the anchor of CNBC's Closing Bell.


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