It's not even five years since President Bush signed the Sarbanes-Oxley Act. But take a look at the changed mood among regulators, politicians, and prosecutors, and you get the feeling that it's much longer than that.
In short, the rulemakers seem now to agree that they've overdone it. Stern attitudes at the Securities and Exchange Commission about the need for companies to check each and every internal control have given way to a fondness for "scalability." The SEC and the Public Company Accounting Oversight Board have embraced "risk-based" approaches instead of bright lines. And prosecutors now appreciate the limits imposed by attorney-client privilege.
An apparent SEC retreat on executive compensation disclosure, a move toward protecting attorney-client privilege, an easing up by regulators on bank's scrutiny of structured finance: The list goes on and on. There can be little doubt that the pendulum has swung away from what senior finance executives have long seen as excessive rulemaking and legislation. Still, the question remains: How much will the current deregulatory mood be translated into action?