US Focus: Time for action
History repeats itself, again. Just when politicians and pundits declared victory over systemic corporate wrongdoing and called for the rollback of protections for investors in US securities markets, it came as no surprise to learn that corporate malfeasance is alive and well. On 22 January, 2007, when defaults and delinquencies began to rise rapidly on subprime mortgages (heralding the beginning of the so-called subprime mortgage crisis), three prominent New York politicians held a press conference in City Hall declaring that the US' burdensome regulatory structure has undermined its own global competitiveness. These politicians identified the 'onerous' burdens of the Sarbanes-Oxley Act and private securities litigation as being behind increased competition from London to attract initial public offerings. Fast-forward to 31 March this year when, in the heat of the subprime mortgage crisis and following the federal government's rescue of Bear Stearns, the US treasury secretary announced a structural shift in the regulation of financial firms, expanding - not rolling back - the federal government's regulatory role. Embarrassed, the politicians calling for curbs on already limited private securities litigation had quietly moved on to other pressing matters.
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