What do U.S. Treasury Secretary Henry Paulson and Barney Frank, D-Mass., the incoming chair of the House Financial Services Committee agree on?

U.S. Treasury Secretary Henry Paulson said the implementation of Sarbanes-Oxley corporate-governance regulations may pose a risk to the U.S. economy, advocating changes that fall short of introducing legislative adjustments.

"While necessary," the Sarbanes-Oxley accounting rules "are being implemented in a way that may be creating unnecessary costs and introducing new risks to our economy," Paulson, former head of Goldman Sachs Group Inc., said in a speech Monday to the Economic Club of New York.

Share sales have declined since the introduction of the law in 2002, and a "significant" amount of the time and cost taken complying with Sarbanes-Oxley might better have been spent creating jobs and rewarding shareholders, Paulson said.

Sarbanes-Oxley costs of compliance may threaten economy, official says BLOOMBERG NEWS, 11/21/2006

Paulson seems to be saying many euphemisms.

Meanwhile, Frank is also dancing around the problem:

"It may have gone too far," Frank said in an interview on Friday. "Let’s see if we can reduce the burdensome aspects without in any way interfering with its good points."

Paulson pointed to efforts under way in other federal agencies to reassess the implementation of Sarbanes-Oxley.

Neither of them can quite bring themselves to say SOX was passed in haste and doesn’t really solve the problems it was intended to solve. Basel II is a better approach.

-jsq

PS: Thanks to Clayton for the heads-up.