By CAMPION WALSH
May 6, 2005 
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CHICAGO -- Regulators and accountants offer the best chance to reduce excessive business burdens from the 2002 Sarbanes-Oxley corporate governance law, as legislative fixes are unrealistic at this point, a co-author of the law said Friday.

The Securities and Exchange Commission and the Public Company Accounting Oversight Board are trying to refine costly and unnecessary accounting treatment of banks and other businesses since the law's passage in a frenzied atmosphere of plunging stock prices and corporate governance scandals at Enron Corp. and WorldCom Inc., said House Financial Services Committee Chairman Michael Oxley, R-Ohio.

Oxley said in retrospect lawmakers could have done more to prevent excessive burdens.

"To try to reopen it now is not realistic," he said in response to questions at the Federal Reserve Bank of Chicago's annual bank structure conference. "To their credit both the SEC and PCAOB have made, I think, good strides to providing some flexibility if they possibly can."

Oxley described as "reasonable" an audience member's suggestion that the law's accounting requirements should have applied only to companies with assets above a threshold of $5 billion or $10 billion. "Had we not been legislating in that cauldron, I suspect that that would have been a very reasonable amendment," he said.

With the public incensed by corporate scandals and lost equity value, in the summer of 2002 President George W. Bush personally asked Oxley and the Senate Banking Committee's then-Chairman Paul Sarbanes , D-Md., to produce reform legislation for his signature in about two weeks.

"Any time that you legislate in that kind of arena, in that kind of atmosphere, probably the pendulum's going to swing too far," Oxley said.

He said nearly all the complaints he has heard about the law relate to its Section 404, which adds internal controls on public corporations' financial reporting and disclosure.

Fortunately regulators have been receptive to complaints of draconian accounting standards, and the PCAOB is expected to issue this month accounting guidelines that should help, the congressman said.

Traumatized by the downfall of Enron and WorldCom accounting firm Arthur Andersen, the accounting industry has been overly conservative of late, Oxley said. "That will change, the pendulum will continue to come back," he said.

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