In March 2008 just weeks before Bear Stearns collapsed, Elizabeth Dole introduced legislation to reduce regulatory controls and oversight on some financial institutions. A few days later, Bear Stearns made a $2500 contribution to her campaign and a few days after making the contribution, Bear Stearns collapsed. In Elizabeth Dole: Absent Without Leave, I alluded to the fact that I had spent hundreds of hours watching video of Senate Banking committee meetings. It was during this time that I learned about Dole's desire to reduce regulations on some financial institutions.
The first mention Dole makes in hearings of the Senate Committee on Banking, Housing and Urban affairs of easing restrictions on financial institutions came on February 14, 2008. She is addressing, The Honorable Christopher Cox, Chairman of the Securities and Exchange Commission. The meeting was being held to discuss the state of the United States economy and financial markets.
And I'm very pleased to hear the strong support, and I hope we can move on that expeditiously.
Chairman Cox, since the passage of Sarbanes-Oxley, there have been a number of complaints from smaller companies, from financial institutions, with regard to Section 404 and the burdensome nature of compliance, especially from the financial institutions because they're heavily regulated.
Has there been any thought of easing the Section 404 requirements for these institutions?
On February 28, 2008 during the The Semiannual Monetary Policy Report to the Congress Elizabeth Dole asked Ben Bernanke the same question about easing regulatory restrictions for some financial institutions.
DOLE: Thank you.
Mr. Chairman, let me ask you about Sarbanes-Oxley. Some smaller banks appear to be clearly overburdened by compliance with Section 404 and 302. These financial institutions are already highly regulated. And it's becoming increasingly apparent that these regulations, while they were well-intended, only increased the cost of doing business.
I'd really appreciate your comments on what needs to be done here.
Following these comments, Elizabeth Dole introduced legislation intended to reduce regulatory requirements for certain financial institutions. In the legislation Dole sought to ease regulations found in Sections 302 and 404 of the Sarbanes-Oxley Act. These sections require that the Chief Executive and Chief Financial officers of a company along with outside auditors formally certify a company's internal auditing is correct.
Just which institutions did Elizabeth Dole not want to have to deal with those pesky regulations? From the Bill:
(c) Exemption for Certain Financial Institutions- The rules of the Commission under subsection (a) shall permit an issuer to elect voluntarily not to prepare and provide the internal control report required by subsection (a) if the issuer is--
`(1) an insured depository institution, as such term is defined in section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(2));
`(2) a bank holding company, as such term is defined in section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)); or
`(3) a savings and loan holding company, as such term is defined in section 10(a)(1)(D) of the Home Owners' Loan Act (12 U.S.C. 1467a(a)(1)(D)).'.
Six days after Dole introduced the legislation, Bear Stearns made a $2500 contribution to Elizabeth Dole. Three days after making the contribution, Bear Stearns collapsed.