NYT editorial: Congress Defends the Big Guys

In the first week of talks over a financial regulatory reform bill, Democratic lawmakers — in some cases with apparent White House backing — have been defeating or delaying reforms to protect individual investors. Instead, they are catering to corporate interests that prefer the status quo — and write big campaign checks.

At its most basic, this bill is supposed to restore stability and fairness to the markets and give Americans some confidence that their efforts to save and invest will not be undone — over and over again — by the destructive excesses of banks and corporations.

Those goals are being undermined by cynical maneuvers. Here is the damage assessment:

COOKING THE BOOKS. A majority of Senate negotiators, including two Democrats, approved a bad provision from the House version of the bill to exempt most publicly traded companies (those worth less than $75 million) from an antifraud auditing requirement in the Sarbanes-Oxley law, passed in 2002 after the Enron debacle. The argument is that the audits are too burdensome, but research shows that they reduce errors and fraud, and that refinements to the law from 2007 have made them less onerous. The upshot is that a bill that is supposed to be about strengthening regulation would instead end a safeguard against financial fraud.

(More here.)