new jersey republican scott garrett says sarbanes-oxley was a costly over-reaction. >> now, it's the 10-year anniversary, so its not like we're moving in a knee-jerk reaction in response to undo it, or to change it. its been 10 years to see how it played out, and we've seen that it played out pretty poorly. >> reporter: garrett is backing legislation that would exempt companies with a market capitalization of less than $350 million from the toughest sarbanes-oxley accounting controls. the president's jobs council suggested an exemption of up to $1 billion. securities law professor john coffee estimates that would cover roughly half of the companies listed on the new york and nasdaq stock exchanges. >> so we are seeing a cycle. there is a crisis. congress tightens controls. thereafter, the industry quietly lobbies step by step, cutting little slices off the salami at each stage to escape that regulation, usually saying it is costly and interferes with job creation. >> reporter: garrett says sarbanes-oxley cost far more than originally estimated and did little to improve the quality of

in effect, sarbanes-oxley is a hefty tax on creativity and innovation.to my mind, sarbanes-oxley is contributing to the creeping calcification of the u.s. economy. what's worse, the legislation did nothing to prevent the financial scandals that got us into our current mess. so enron's bad behavior spawned bad legislation that is still with us today. thanks a lot, enron. i'm mike mandel. >> tom: our enron coverage continues tomorrow. harvey pitt was the top stock cop when enron collapsed. we talk with the former securities and exchange commission chairman about the implosion and regulatory changes since. plus, the federal reserve releases its beige book survey of regional economies, and teen retailers aeropostale, american eagle outfitters, and express report quarterly results. >> susie: facebook has agreed to settle an investigation by the federal trade commission that looked into deceptive privacy practices. the social media giant will subject itself to an independent audit on consumer privacy for the next 20 years. facebook founder and c.e.o. mark zuck

in financial areas whether it's glass steegle, sarbanes oxley, i don't know why financial bills haveames with them. no one pressed them about the alternative. i don't know if anybody wants to go back to the fall of 2008 when you had banks without capital standards and liquidity requirements. you had a shadow banking system, you had mortgage regulations that would allow anybody to get a mortgage regardless of whether they could pay for it or not. i don't know that anyone wants to return to that. the idea you repeal it, what do you replace it with? no one asks that question or what they're opposed to in the bill specifically. i'm not suggesting it was totally bipartisan, but a lot involved democrats and republicans. ironically it was a bipartisan product in my ways and i wouldn't have passed it without republican support. >> on on one end of the political spectrum on the right some say too much is a bad thing. on the other side a lot of liberals think the banks are still too large and should be broken up, still too big to fail. >> i understand that. i had to put a bill together. i'm no

oxley specifically it is about this coming battle to extend the pay roll tax cut. but that isn't much of a battle. everyone agrees it will be extended. the president wants to cut it in half. not only for employees but employers as well. would it cost a lot of money and there in as they say lies the rub. it is how you pay for it. the senate will put a bill on the floor that would charge a surtax to people making more than a million a year. this speech was broadly political. as the calendar moves toward november of next year, the line between politics and policy gets ever more blurry. the president using aspirational imagery, talking about the values of hard work and fair play, bringing to mind that bootstrap narrative that is so popular with politicians in an election year. the president using it very effectively. i thought he was very fired up before that crowd oxley on his side in scranton, pennsylvania. >> what did you think when he said, he wants his kids and he named his own children. sasha and malia, to grow up in a country built on big generous values. >> rep

. >> at the same time, chris oxley is heading toward the intersection with his son in the car, on thea baseball game. >> we saw a big fireball in front of us, then smoke rising from the fireball. we had a mushroom cloud on top of that probably went two to three stories up. the whole road was on fire. my son was terrified about it, because he was asking me dad, do we have to go towards this, this is scaring me. >> but he hears steve shouting for help. so chris stops the car and jumps out, telling his son to stay in the car. >> somebody's life, you know, was probably in danger. >> i thought it was going to blow up so i was trying to get him out and get him as far away from the car as we could. >> the inside of the car was starting now to catch on fire, and we had trouble pulling the person out of the car. >> as they struggled, other good samaritans appear. >> somebody with an extinguisher, fire extinguisher, came and sprayed a little bit on the inside. >> but the heat is intense. >> i could feel the heat all the way from here, and obviously, i'm across the street. >> and they still can'

we built up sarbanes-oxley. i argued we need cultures that do it right. >> rose: you mean too much regulation was a bad idea? we needed something else? sarbanes-oxley was a lot of... added on a whole level of regulation >> it became albatross. if someone goes offshore to money launder, it's working. that's why they learned not do it on shore. but if we create cultures committed to doing the right thing, people won't think to behave that way on shore or offshore. with this global economic cris it's very different. it used to be that i would meet c.e.o.s, they woulder that message and say "this matters. i'd like you to speak to my goal cooper." everybody want a great goalkeeper but no one nots to play goalie. i'm speaking metaphorically. that's the geral counsel or chief risk officer. the idea was behavior was parked overere. make sure we don't go to jail or pay too many fines and penalties but leave business to us. this time around the c.e.o.s are keeping the conversation because how all 11 players play the game

es una ley complicada que se llama sarbanes-oxley, que bÁsicamente requiere una auditorÍa de las compaÑiasnegocios no tienen los recursos para contratar a un bufete de abogados y contadores para ayudarlos con eso. esto crea una excepciÓn para los pequeÑos comerciantes. y para finalizar, habÍa otros temas de research y development, como dicen en inglÉs. pero tambien tocamos el tema migratorio. eliminamos las cuotas que existen por paÍses, que, realmente, no tienen sentido. lo que queremos es traer a los mejores, a los mÁs inteligentes, a los que quieren entrar a este paÍs y contribuir. y se nos hace imposible, porque existe una cuota. por ejemplo, cuando lleguemos a la cuota con mÉxico, con filipina o a la cuota con india no pueden entrar mÁs personas de ese paÍs, porque otros paÍses son parte de la cuota. eliminamos eso y, bÁsicamente, lo que decimos es que si una persona tiene algo para contribuir, vamos a dejarla entrar a trabajar en este paÍs. y lo mÁs importante es que hacemos un cambio a la inmigraciÓn familiar; porque nadie va a venir... aunque sea muy inteligente y tenga mucho diner

oxley said he had been given the one. salute. that was the end of 2006. at that point in 2005, i did try to get legislation passed to stop loans going to people who could not afford them. that was blocked by tom delay. he said we would not do that. that brings us to 2006. in 2006, and you can read this in hank paulson's book. he approached me because it looked like we may when the congress back. the asked with me if i would work with him on serious reform of fannie and freddie. i was worried enough that i said yes. usc said, we won, i kept my word, and a first became chairman with any serious responsibility in 2007. tom delay ran the house. the majority -- the minority did not have much to say. until 2007, i have virtually no impact. then i became chairman and one of the first things we did was pass legislation to further regulate fannie mae and freddie mac, giving the secretary of the treasury the power he wanted. there was one group that monitored fannie mae and freddie mac to regulate and they announced they were dissolving as a result of our bill pass

the particular -- i was ranking member of the committee from 20 o 3-2007 and mike oxley ran in a bipartisanay. we weren't making policy. today that's not the case the republican party today in the house is dominated, well i guess i would say this it consists half of people who think like michele bachmann and half of people who are afraid of losing a primary to people like michele bachmann. that leaves you very little to work things out. there are a few members i can work with, and look, i have to say part of this is not -- remember congress is not some entity that parachuted through the dome. we were elected by people. there's no member of house of representatives who didn't get more votes than anybody else for their job. the public cannot be totally absolved from this responsibility. they picked us! and in particular what you have is this, and it has to do with primaries. the activist in both primaries, people on the left and people on the right, live in parallel universes. no longer do people get most of their information from a common media source and then diverge how they interpret it.

oxley said he had been given the one. salute. that was the end of 2006. at that point in 2005, i did try to get legislation passed to stop loans going to people who could not afford them. that was blocked by tom delay. he said we would not do that. that brings us to 2006. in 2006, and you can read this in hank paulson's buook. he approached me because it looked like we may when the congress back. the asked with me if i would work with him on serious reform of fannie and freddie. i was worried enough that i said yes. usc said, we won, i kept my word, and a first became chairman with any serious responsibility in 2007. tom delay ran the house. the majority -- the minority did not have much to say. until 2007, i have virtually no impact. then i became chairman and one of the first things we did was pass legislation to further regulate fannie mae and freddie mac, giving the secretary of the treasury the power he wanted. there was one group that monitored fannie mae and freddie mac to regulate and they announced they were dissolving as a result of our bill pas

there were disputes among the republicans, between bush and oxley and shelby and the senate. but we worked with paulson. as a result we got a bill passed in the house in 2007, in the senate in 2008. paulson then put them into receivership. and the man who now runs fannie mae and freddie mac -- obama tried to fire him and the senate saved him. he said that since the legislation that we passed, the democrats in 2008 went into effect, there have been no further losses incurred by fannie mae and freddie mac. they have been profitable since then. >> great to have you on. congressman barney frank, thanks for coming on. >>> coming up, republicans are twisting president obama's words. i would say lying about it. he didn't call americans lazy. we've got the videotape. we're going to show you what the president said and what they're distorting to the point of lying. you're watching "hardball" on msnbc. >>> this week in wisconsin, the campaign to recall republican governor scott walker got underway. and right now, according to a new poll from wisconsin public radio, wisconsin voters are

we didn't have sarbanes oxley or a strong e.p.a. or the regulations coming out of washington. >>neil: you are saying you could not have done today what you did then? >>guest: no i don't believe it. i really don't. i have tried to put myself back if those days, and honest to god don't believe if we had, if we started the home depot today with the environment the same, with no big stores the way our stores were, we cannot have gone past 10 or 15 stores. it is impossible. if you just looked at litigation that businesses go through, not running a government you cannot believe the amount of litigation on every single thing you are doing, my board was paid up of people who are involved in our business. we had all investors in our business and when we made a decision, arthur, myself, and kenny, we never consulted lawyers. we never had to do that. today a c.e.o. cannot make a decision without having groups of lawyers helping him. >>neil: but now you have -- there have been all the occupy wall street folk whose don't trust guys like you saying the disparity between the wealths and the

one of the provisioning of the sarbanes-oxley rules is senior exclusive and-- it's typically at least the chief executive officer and the c.f.oosmed-- have to certify internal controls are adequate. for a big financial firm that has to include their risk controls. willful violation is-- sorry, a knowing violation is punishable by up to five years in jail time, willful violation is 20 years of jail time but no one's gone after these theories seriously. it's worse than lynn alludes, although what he says about the revolving door is 100% true, is the role big banks play in campaign finance. theatre second biggest donors in washington, second only to the health care industry, and for any case to be pursuedaisa criminal case, they can't pursue criminal cases on their own. they have to be pursued in conjunction with the department of justice and the department of justice has been noticeably absent on this beat. >> suarez: mark, have people who committed crimes actually been in some jeopardy after the fact? >> not that we can tell for those who have committed crimes. i don't think it's an ei

there were disputes among the republicans, between bush and chairman mike oxley and the chairman shelby in the senate. but we worked with hank paulson, and as a result, we got a bill passed in the house in 2007, in the senate in 2008. paulson then put them into receivership. and the man who now runs fannie mae and freddie mac, who is no friend of the democrats, obama tried to fire him and the senate saved him. he says since the legislation that we passed, the democrats in 2008, went into effect, there have been no further losses incurred by fannie mae and freddie mac. they have been profitable since then. the losses come from the period when republicans were in control and blocked any legislation. >> great to have you on, congressman barney frank of massachusetts, thanks for having you on. >>> coming up, republicans are twisting president obama's words, i'd say worse than that, i'd say lying about it. he didn't call americans lazy, the real "l" word here is liar, and it refers to the ad man who wrote this ad for rick perry. we'll see you what the president said and what they're distorti

but oxley, they did not see it as a friendship when you say friend, was it -- i'm asking. these are awkward questions but i'll ask you the questions you'll be asked. was this an affair? >> no. >> there was no sex. >> no. >> none. >> no. >> if this woman says there is, she's lying? >> well, wolf, let's see what the story will be. i don't want to get into being pinned down on some things until we see what the story will be. >> but they basically gave you the outlines. the atlantic television. >> they gave my attorney the outline. so i'm now speaking secondhand in terms of what i know about the story. when we can the story, we will respond. >> mary matlin, he said it's not true. he said he needs to know more specifically about what the woman is alleging. as someone who knows the rough and tumble, how damaging is this to herman cain's candidacy which was already struggling? >> wellering didn't just say it wasn't true. he said it with emotion. although he was calm. he was very clear. he is definitive, demonstrative, he was calm. i don't know of any campaign that has ever surviv

section 304 the sarbanes-oxley allows us to sue and requires ceo or cfo to claw back certain incentive taste bonuses and equity awards as well as certain stock sale profits when the company that they work for it fails to comply with certain financial reporting requirements as a result of misconduct. we have used that to limit our cases to whether or not the tool is appropriate. it is a strong tool because blakey say, these are standalone actions. the ceo or cfo doesn't have to be involved in the misconduct. if the company they work for does at the compensation can be clawed back. so we look at it closely. it is not without some issues obviously. ceos and cfos are differently position. some are completely absent t. and don't do their at all. i misconduct occurs. others may be very active, maybe been following best practices that may be misconduct occurs. so you need to be exercising a range of discretion in your cases, but it's a totally look up close and brought a number of actions in this area. >> senator merkley. >> thank you very much, mr. chair. i wanted to turn to mf global, which

section 304 the sarbanes-oxley allows us to sue and requires ceo or cfo to claw back certain incentive taste bonuses and equity awards as well as certain stock sale profits when the company that they work for it fails to comply with certain financial reporting requirements as a result of misconduct. we have used that to limit our cases to whether or not the tool is appropriate. it is a strong tool because blakey say, these are standalone actions. the ceo or cfo doesn't have to be involved in the misconduct. if the company they work for does at the compensation can be clawed back. so we look at it closely. it is not without some issues obviously. ceos and cfos are differently position. some are completely absent t. and don't do their at all. i misconduct occurs. others may be very active, maybe been following best practices that may be misconduct occurs. so you need to be exercising a range of discretion in your cases, but it's a totally look up close and brought a number of actions in this area. >> senator merkley. >> thank you very much, mr. chair. i wanted to turn to mf global, which

for "the wall street journal" sarbanes oxley is even worse than attacking people's telephones. but what we have is a failure to do anything when they were in power. the argument is that we need better balance. i have to say my colleagues on this committee be only the few people in america who think that the danger is that we will over protect consumers. the history of the relationship of consumers to financial institutions and the role of the regulators heartily support the argument that there is a danger that the consumer will be overprotective. this is the one chance we have to give them the kind of protection they ought to have. >> i would like to recognize mr. rice for one and a half minutes for an opening statement. specs before madame chair. the distinction as our concern is the danger in this process is the we will not protect in terms of safety and soundness. our distinction, our concern is that the provincial regulator doesn't have a seat at that table that the provincial regulator needs in order to the advice on safety and soundness, and the reason we are concerned ab

i am also concerned about changes to the sarbanes oxley act regarding committed to banks. to all the witnesses today, thank you for taking time out of your busy schedule to come here today. i yield back the balance of my time. >> thank you madam chair and thanks to my colleague for bringing this important communities first act to a hearing today. i represent the 23rd district of texas, which is engaged in farming and ranching. this is the only source of capital available in these areas. they have had to deal with wildfires and record drought. the economic impact has been devastating. credit has been frozen in a number of small towns. the consequences are palatable as we speak to residents and business owners in these areas. the provision of the community first act go a long way toward lifting the burden from the shoulders of america also community banks. my thanks to the chairman of this committee and also my colleague for bringing this bill. >> that concludes by opening statements. i will introduce the witnesses for the purpose of giving a five minute opening statement. o

act would also reform which banks are required to comply with the costly, costly burdens of sarbanes-oxley. current law exempts banks with market capitalization of $75 million from compliance under section 404. the benefits of that section do not appear to be worth the costs, so my legislation raises that threshold. another commonsense provision would encourage americans to save by reducing the tax on longer-term certificates of deposit. it would also allow for individuals under the age of 26 to invest in roth ira's without regard to their income level. we desperately need americans to save money for their long-term retirement benefits. the community first act would also reform the new consumer financial protection bureau so that the national credit union administration, the fdic, the federal reserve, and the other regulators would have a meaningful role in the creation of consumer protection rules. dodd-frank provides these regulators insufficient input and review of the cfpb and the results of poorly written regulations could mean less credit and, again, fewer jobs. there seems to be som

we are even sarbanes oxley compliant. and contrary to the understanding of most americans, the postal service is not supported at all through taxpayer dollars. we generate all of our revenue from the sale of postage products and services. that means the postal service must compete for customers. we must sell, actively sell and persuade people to buy our products in a very competitive marketplace. unfortunately, while we have a mandate to operate like a business, the reality is we do not have the flexibility under current law to function like a business. america needs a postal service that can operate like -- more like a business. consider the example of a post office. most retail companies would close retail stores that fail to turn a profit. roughly 25,000 out of our 32,000 post offices operate at a loss. we have thousands of post offices that bring in life and $20,000 in revenue in the year that cost more than $60,000 to operate. and many of these are within a few miles of a neighboring post office. and yet, the reactio

, first in this committee, although the wall to "the wall street journal" denounced it -- sarbanes-oxley is worse than hacking people's phones. the argument is that we need better balance. my colleagues in this committee may be only the few people in america who think that the danger is that we will over protect consumers. the history of the relationship of consumers to the financial institutions and regulators hardly supports the argument that there was a danger that consumers will be overprotective. this is the one chance we have to give them the protection they ought to have. >> thank you. i'd like to recognize mr. royce for 1.5 minutes. >> thank you. the distinction is that the danger in this process is that we will not protect in terms of safety and soundness. our distinction is that the prudential regulator does not have the seat at that table that the credential regulator needs in order to offer the advice on safety and soundness. the reason we are concerned about this is because we have gone down this road before. the reason we are concerned about this is because this committee h

we are even sarbanes oxley compliant. contrary to the understanding of most americans, the postal service is not supported at all through taxpayer dollars. we generate all of our revenue from the sale of's products and services. the's service -- all of our revenue from the sale of postal services and products. the postal service must compete. we operate like a business. but we do not have the flexibility to function like a business. america needs a postal service that can operate like a business. consider the example of a post office. 25,000 out of our 30,000 post offices operate at a loss. we have thousands of post offices that bring in less than $20,000 of revenue in a year that cost more than $60,000 to operate. many of these within a few miles of the next neighboring post office. the reaction from attempting to close one of these low activity post offices is something to behold. people rally around their post office. they do so because it is a cherished institution. that demonstrates the power of our brand and the ext

we are even sarbanes oxley compliant. [laughter] and contrary to the understanding of most americans, the postal service is not supported at all through taxpayer dollars. we generate all of our revenue from the sale of postage products and services. that means the postal service must compete for customers. we must sell, actively sell and persuade people to buy our products in a very competitive marketplace. unfortunately, while we have a mandate to operate like a business, the reality is we do not have the flexibility under current law to function like a business. america needs a postal service that can operate like -- more like a business. consider the example of a post office. most retail companies would close retail stores that fail to turn a profit. roughly 25,000 out of our 32,000 post offices operate at a loss. we have thousands of post offices that bring in life and -- bring in less than $20,000 in revenue in the year that cost more than $60,000 to operate. and many of these are within a few miles of a neighboring