ACan multi-billion-dollar corporations like AIG and Lehman Brothers collapse and die without anybody having the faintest idea something was wrong? No, of course not. But don’t expect Beverly Hills Democrat Henry Waxman and other House Democrats to let facts get in the way of their simplistic narrative pinning the entire blame for the Wall Street economic crisis on the Bush administration’s alleged penchant for “deregulation.” In fact, the Bush administration and Congress increased government regulation of much of the economy following the Enron and WorldCom debacles, beginning with the Sarbanes-Oxley Act of 2002 (SOX). The problem now is that none of this added regulation addressed the activities of Wall Street investment bankers hell-bent on cashing in on the government-mandated flood of sub-prime mortgages.
For the record, SOX imposed a host of new regulations on the financial sector, with compliance costs estimated as high as $1.4 trillion – so high, in fact, that many foreign owned firms and small business abandoned plans to go public. Also for the record, as noted recently by The Heritage Foundation, regulatory agency spending under Bush was up to $44.9 billion in 2007 from $27 billion in 2001, a 44% increase. And the administration has added more than more than 4,500 pages of new regulations to the Code of Federal Regulations since January 2001.
