it's called the sarbanes-oxley act of 2002.verwhelmingly passed by congress and signed by president bush following the last big round of corporate scandals, involving enron, tyco and worldcom. it was supposed to restore confidence in american corporations and financial markets. the sarbanes-oxley act imposed strict rules for corporate governance, requiring chief executive officers and chief financial officers to certify under oath that their financial statements are accurate, and that they have established an effective set of internal controls to insure that all relevant information reaches investors. knowingly signing a false statement is a criminal offense punishable with up to five years in prison. frank partnoy is a highly regarded securities lawyer, a professor at the university of san diego law school, and an expert on sarbanes-oxley. >> frank partnoy: the idea was to have a criminal statute in place that would make c.e.o.s and c.f.o.s think twice, think three times before they signed their names attesting to the accuracy

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

canseco's questions were focusing on sarbanes-oxley, focusing on godfrey. we've got the 33 act, the 34 act. all sorts of things, but the thing we don't have some specific requirement that there be a segregated account. that may be too harsh on the system and won't operate very efficiently. but in this instance, it would've potentially blocked or been a firewall to slow down the movement of the money. so i am just trying to figure out as mr. y no less, how could we have prevented this? because in the last days, your work was chaotic. >> congressmen, until the facts are peeled that i literally thousands of transactions, i am moving into a speculative for him and i could be misleading. ! mr. avila, giovanni response to that? be her year as legislators. i'm not here to judge what happened. a lot of people lost a lot of money and i'm trying to figure out if there is a way that could be -- we could do with it in terms of the law to stop this from happening. >> congressmen, at the risk of repeating myself, i think that we will and the fullness of time, when we und

rehearsed, but also couched in the language that could serve as a defense against sarbanes-oxley.u'll be talking about it more on the journal editorial report. paul, thank you. he hosts that report every day -- i'm sorry, every saturday, 2 p.m. eastern here on fox news channel. jenna: well, state governments drowning in debt now slashing their budgets over the last few years in response, so one of the questions we have today is how is spending actually going up? dan springer with more on this from seattle. dan? >> reporter: yeah, jenna, it's because politicians really at all levels have a different definition of what a budget cut is. they say they're cutting way back when, in fact, all they're doing is spending a little less than what they had hoped to spend. they are actually spending a lot more. take washington state, for example. the governor is calling for a big sales tax increase to avoid $2 billion in spending cuts. she says the state has already cut to the bone by chopping $10 billion, but her numbers don't quite add up. total state spending rose $2 billion since 2008, stat

a lot of people dislike aspects of sarbanes-oxley.equires the cfo and ceo, the top dogs of these companies to attest to the financials at these large corporations and that hasn't been enforced. if you aren't going to enforce, why make all these new laws that just make it complicated. the ten commandments fits on one page. >> capital requirements is two words. anyway, it's an absolute pleasure, mike. congratulations on the book. and again, if you're going to read a book about wall street, i really can't think of somebody who understands better how banks actually work and how they they have worked for a long time than mike. "compile on wall street: one analyst's fight to save the big banks from themselves." congratulations and thanks for the time today. >> thank you. >> and good-bye to the panel. straight ahead, talk about fanatics, as we head into bowl season, a new survey goes inside the minds of college football fans and the results are next. my doctor told me calcium is best absorbed in small continuous amounts. only one calcium sup

honestly, i helped write sarbanes-oxley.ceo of country-wide signed those statements. i don't understand why in god's name, lenny brewer, eric holder rmpbt going after him and putting him in jail. >> you have folks like the attorney general of new york, snyderman. >> lisa madigan and others. >> why has the administration not taken a firmer stance? >> i'll tell you why they haven't done it. it's easy. >> last thing the obama administration wants to be is on the opposite side -- they have a tenuous relationship. >> there's a good story in the "wall street journal" today talking to a former fbi prosecutor or investigator saying we're bringing civil cases in a lot of these areas because it's very difficult to bring criminal cases based on stuff in the mortgage documents. maybe you disagree. maybe it is easy to bring the criminal cases. there are now people on the record saying we just made the decision to go civil enforcement. s.e.c. fraud cases. >> the administration should pony up at least one of two of these jokers and just ta

the enron scandal shook the accounting industry, leading to tougher federal standards under the sarbanes-oxley act. the company's implosion also left the accounting industry with four big firms, instead of five. accounting professor thomas lys from northwestern university's kellogg school of management says less competition has been costly. >> that certainly puts restriction on price competition or service competition, which in turn increases the cost. >> reporter: for altair advisers, the last ten years have been good ones. the firm has tripled in size. still, founding partner jason laurie says watching what happened to andersen was a valuable business lesson. >> just because you're a big firm, just because you've been in business a long time doesn't necessarily mean that you'll stay in business. >> reporter: diane eastabrook, "nightly business report," chicago. >> susie: tomorrow, we talk with the woman known as the "enron whistle blower". sherron watkins was the enron vice president who alerted then- c.e.o. ken lay of accounting irregularities at the energy giant. >> tom: here's what we're

he may have broken the law sarbanes oxley in falsely certifying financial statements.he may, we could go through a list of possibilities. but talking with the investigators, talking with the congressional committees i can tell you. this right now not one single agency has evidence of wrongdoing so far as i can determine going through my conversations with the folks involved. merrill lynch debacle stanley o'neal. we know why they went bankrupt because of the mortgage derivatives and all of that we know. they lost all their money in that. but we don't know where the money is in mf global and corzine says he doesn't know. i think there has to be an fbi investigation. somebody might have stolen the money, lowe. somebody might have stolen it. >> absolutely. >> whether you have 1.2 billion missioning from a company that had $41 billion in assets, that is a lot of money by any definition. >> bill: yes. >> we do know that there is an investigation into the criminal possibilities here as well. so, don't give up hope. >> >> bill: i'm not hoping. i don't want to be a bad guy. i'm

you borate supporter of sarbanes oxley -- you were a supporter of sarbanes oxley. >> my understanding is that our books and records were reflecting the chaos that occurred in the last two or three days as the firm was under severe pressure and have lost the confidence of the marketplace. i think that is distinct from the books and records. i have reason to believe based on the reporting that occured that they were not in a mess. that is a question i think others will have to think about after they look at them. hourss clear in the last there were many, many, many more transactions than typically occur. >> why did mf global report that it didn't have any position when it began entering into transactions that entered into debt exposure? >> i believe without the ability to be certain on this, always open to confirming with records, you must be looking to the month end reports on our capital position. in september 2010, it is quite possible that beginning positions we took were on the books. >> my time has expired. we appreciate the indulgence. we turn to the ranking member of people like

dodd-frank, sarbanes oxley, and the lack of ability to give options and because of the we regulations litigation, the labor laws that we have. no. we started in 1978, 1979 and we did 2349 have -- not have these problems. >>neil: but you had an economy mired in a recession as bad as things get and you got it going. >>guest: yeah, but america wants to help you. america wanted to let you grow. and things everyone not out there. we did not have this antibusiness we attitude that we have today and it is permeated not only in the government but it is starting in our schools, as well, kids are taught that capital im, and i am sorry i used the word, the free enterprise system is bad. it is not bad. it is like you are afraid to use the term. that is why we started the job creators alliance and the reason was that we wanted business people to be able to go out and talk about not only what the federal government is doing to them, but what local governments and state governments and all the regulations they have to go through and i would hope that someone, whoever is going to be president of the

[applause] three, repeal sarbanes-oxley immediately. every one of these steps creates more jobs. it lib rates small banks, moves in the right direction. i do think you need some health reform right after you repeal obama care. we need to reform some financial services after we repeal dodd-frank but this system is guaranteed to be crument and wrong and it is crippling the american economy. now, a couple more stems. we need to replace the environmental protection agency with a brand-new -- [applause] we need a brand-new environmental solutions agency. i would not transfer anybody from the current agency. this is an institution which has grown so radical, so lacking in common sense and so dedicated to crippling american business and dictating to local communities that it needs to be replaced bay common sense pracks -- practical organization that focuses on innovation and developing new and better approaches and not punishment and dictating to the whole country. i am for a 21st century food and drug administration, which is in the laboratory, understanding science and accelerates get

the spending restraints and getting rid of obamacare, sarbanes oxley, and dodd-frank this is what a conservative growth reagan economist president would do and newt who was there at the beginning, he is proposing exactly the reagan camp agenda. >>dagen: great to see you thank you for coming to us first. art laffer, take care. happy new year, too. despite the endorsement, larry sees ron paul or romney taking top prize. we should not be ready for big surprises? >>guest: i am sticking by it but i am always ready for a surprise. remember, in 1980 everyone was shocked when bush beat ronald reagan or when pat robertson pushed the same george h.w. bush in third place in iowa and four years ago, everyone was shocked when mike huckabee beat romney in iowa. so, iowa is full of surprises. we are always welcoming those surprises when they happen. >>dagen: you don't think, do you think the likelihood of a rick santorum coming out of nowhere, how small is it next week? >>guest: well, if you are talking about finishing first, obviously sit a very small probability. but, if there are three or four tickets out o

president obama talked about section 404 of sarbanes oxley. we heard how remains one of the most egregious deterrents towards small business men and women accessing capital but i don't know that you or the sec has said anything about the cost benefit analysis of section 404 and its compliance as relate to small forms. >> we share the concern about access to capital for small business. we created a new advisory committee helping us confront small business capital formation issues and looking at all kinds of initiatives including raising the limit on regulation a offering with shareholders at the right number of for a company to have to begin publicly reporting to the sec whether we should relax general solicitation ban and other -- we have a lot on our place and a lot of initiatives on going. i have personally weighed in on concern about raising the 404 be exemption as high as some bills consider doing that. it is $75 million and covers 60% of all public companies do not have this reporting. to go to $1 billion would concern me because we have

then we want to repeal sarbanes-oxley which is a bill that added a lot of paper work for no new net information. so people would be better off if we eliminate those. i would ask congress when they come in to session on january 3rd next year, not 2012 since we're almost in it, the year after next as of today, next year as of tomorrow, i would ask the congress to stay in session and to repeal all three before the presidential inaugural so the day after the inaugural i could sign them and we would have begun to clear out the clutter as of that moment. i would also on the day of the inaugural sign a series of executive orders all of which will be posted on october 1st so it will be part of the last move campaign and the first executive order i'll sign will abolish all of the white house czars as of that moment. [ applause ] on longer perm regulatory reform we need to replace the epa with a environmental solutions agency. the current spae a bureaucracy totally out of touch with reality, and very destructive of local governments and destructive of both agriculture and industry and people of you have

congress passed a law, sarbanes-oxley which made congress feel like they had done something. then you had this whole of the world over here that was similar, connected, in a sense, you know, with things like mortgage-backed securities market. but in the 2000 time period, the last decade up to the collapse, there was shuja mounts of momentum pushing those kind of markets forward. the president of the united states were behind, everybody should all make -- own a home. congress both republicans and democrats were happily sing let's make it easier to own homes. and let's not take a look at how it's happening, whether these people can afford it, where the people are lying on the loan application. i mean, the system got in that eddie got almost laughably uncontrolled. and nobody much seem to care. there were some stories that raised some red flags, but it was such a huge, you know, tidal wave of activity and optimism that, i don't know, maybe journalists could have stopped it, certainly could have done more. but there was a certain systemic large numbers of people involved in it th

>> reporter: under sarbanes-oxley which governs corporations and the law governing corporations, it doesn't matter if accounting department was at arm's length. it doesn't matter if you say you didn't know what was going on. you are the chief executive officer of that company, you are legally liable for what goes on with the accounting and the finances of that company. that is corzine's legal liability and his jeopardy. megyn: this is the first time in more than 100 years that congress has subpoenaed a former senator to testify. how extraordinary this is, what we're seeing on capitol hill today, stu. thank you. i want to tell our viewers we will be monitoring mr. corzine's statement as well -- as i told you, 21 pages, that's a lot of talking -- we'll pull the highlights and talk about that in just a little bit. >>> we just got a picture of the suspect in this shooting on the campus of virginia tech. it'll be ready in one minute, we'll show it to you as soon as we have it. we are also hearing that the shots fired were across the street from west ambler johnson where the shootings took place

repeal sarbanes-oxley, the corporate financial reporting. doug, rick santorum, took a look at that and said you know what? ron paul couldn't get congress to cut or eliminate anything since he only passed one bill in 20 years in congress. i double-checked that with a library of congress. ron paul sponsored 620 bills. he passed one and it was fairly insignificant. doesn't congressman paul have a history of failure when it comes to getting his proposals passed? >> you know, the greatest contribution he has made, he doesn't get a lot of credit for it because he doesn't put his name on everything, was pulling back the curtain on the federal reserve. four years, ago, gregg, 74% of this country didn't even know what the federal reserve. today 78% of the nation wants it audited. obama, romney, would audit a waitress to make sure she pays taxes on her tip money but won't audit the federal reserve. but thanks to ron paul we got a partial audit. it showed in 2008 that $16 trillion, the national debt was 14 trillion. $16 trillion was loaned out in inter

know, there are a broad set of compliance issues and internal audits and, um, as i suggested, sarbanes-oxley internal audits that confirm kinds of operations are operating the way they're supposed to. so those are ongoing daily. >> okay. thank you, sir, appreciate it. >> gentleman's time hases expired. chair now recognizes the gentleman from kansas for five minutes. >> thank you, mr. chairman. and, senator, a follow up on the question that the gentleman from arkansas made. you did mention your concern about that. if you were so concerned about making certain that your investors were whole, how come you quit four days after bankruptcy was declared? >> um, in a response to a board request, um, is why -- >> okay. during those four intervening days, what did you do to attempt to make investors whole? >> i resigned on november 3rd? that's correct. two days. and i spent tuesday in the early morning hours trying to find out some of the same questions that people are asking here with no particular positive results on that. >> so nobody seemed to know where the funds were and no one would tell you? >

and you were a supporter of sarbanes-oxley, like myself. >> mr. chairman, my understanding is that our books and records were reflecting the chaos that occurred in the last two or three days as the firm was under severe pressure and had lost the confidence of the marketplace. i think that is distinct from the books and records. i think i have reason to believe, based on the least the reporting that occurred in our audit committees over a period of time, that our books and records were in a mess. but that is a question i think others will have to opine about after they look at those in retrospect. it is clear that in the last hours, last days, there were many, many, many more transactions than typically occur. >> one last question. why did mf global report to september 2010te that it did not have any foreign sovereign debt that it carried over in mid 2010? >> mr. chairman, i believe, again, without checking records and without the ability to be certain on this, always open to confirming with records, i think you must be reporting -- looking to the

i would also ask and to repeal sarbanes oxley which has produced no information of any value over theyears. those will start to liberate american business. i would like those three done before i am sworn in, so the day after i am sworn in, i can sign them and we have that are done in january and we can go about passing good reforms to replace the bad ones we have repealed. on the day i am inaugurated, we will have a day one plan that we will publish by october 1st of next year that i will sign two hours after i am sworn in. i will sign between 102 hundred executive orders. the first will abolish all of as of thatouse czars moment. [applause] in addition to repealing those three bills, i would ask the congress to replace the environmental protection agency with a brand new environmental solutions agency, and i mean replaced. i believe the current bureaucracy at the epa is so radical, so anti-community and so lacking in common sense you can our format. everywhere i go, small towns tell me they are being crushed by epa bureaucrats in washington who never visited their town and have no id

[applause] three, repeal sarbanes-oxley immediately. [applause] everyone at the steps raises more jobs. eryone of the steps liberate small banks, moves it in the right direction and again i do think you need some health reform right after you appeal obamacare. i think we need to reform some financial services right after re-repeal dodd-frank at this big government centralized bureaucratic system is guaranteed to be corrupt and is guaranteed to be wrong and it is crippling the american economy. now a couple more steps. we need to replace the environmental protection agency with a brand-new -- [applause] we need a brand-new solutions agency and when i say replace i mean i would not transfer anybody from the current agency. this is an institution which has grown so radical, so lacking in common sense and so dedicated to crippling american business and dictating thlocal communities that it needs to be replaced by a commonsense, practical organization that takes into account economics and that focuses on innovation and developing new and bet

present obama's talked about section 404 of sarbanes-oxley. heard testimony last week in this committee about how it remains one of the most egregious deterrence toward entrepreneur, small businessmen and women accessing capital but i don't know that you or the sec has said anything about the cost benefit analysis of section 404 and its compliance as it relates to small firms. >> senator i'm happy to talk about that. as you know we share the concern of asset of capital to help us confront capital issues. we are looking at all kinds of initiatives including raising the limit on regulation a offering whether 500 shareholders is still the right number or right company to have to begin public the reporting to the sec, whether she we should relax the general solicitation ban and an number of other things. we have a lot on her plate and a lot of initiatives ongoing. i will say that i have personally weighed in on, with concern about raising the 404b exemption as high as i believe some bills are considering doing that. is currently $75 million which

he and the cfo as every company does under sarbanes oxley.pened? and, again, it's been six weeks. what happened? what were the internal controls? what's happening in terms of the audits. what should be happening? i not only have questions for the company, but the regulators, as well. what ought to be happening right now? because this is about, you know, the company can risk whatever they want in their own money. this is about customer's money, which is supposed to be separ e separate. >> that's why it sends chills up our spine. it takes you back to 2001 and 2008 where we think we have all these regulators and everything is in place. how do these things still happen? as you said very clearly, we have computers and we have software that can track all this stuff. how does a billion dollars or more go missing? >> another irony in all of this, too, a lot of farmers and ranchers and grain elevators who were hedging their risk. they were trying to take risk out of their equation so they knew exactly what their costs would be so that they could produ

. >> if congress imposed on the justice department the same requirements that sarbane's oxley imposes would be gone. under the law, he would be responsible for what happened on his watch. >> isn't this endemic in the entire corporate culture that you always protect the person at the top? >> yes, so who is being protected? is it eric holder or barack obama? >> we'll leave it there. it's a thriller! it's a cliffhanger. >> this is going to keep going on. this is going to go on until election day if some heads of the justice department doesn't roll first. >> he said some other people will fall victim to those guns. because he admits they're in mexico and they're out of control. they're with the drug cartel. >> and there are thousands of them out there. >> all right, judge, thanks so much. we'll be watching your show on the fox business network, of course. freedom watch. >> glenn beck and mike huckabee tonight. i wonder if i can get them to agree on flick. >> probably not. >> coming up on our show, eight years and 3,000 miles later, a runaway dog turns up clear across the country. this mor