As President Obama reflects on what is needed to make a reality his professed desire to bring America into the future by updating our regulatory apparatus to allow needed economic activity, he need look no further than two very recent articles about current activity.
The first discusses the effort of the Public Company Accounting Oversight Board to extend its oversight to Chinese accounting firms, which audit Chinese companies that are traded in the U.S. In the words of the Board's director, James Doty, it will take "creativity" and "persistence" to obtain the agreement of Chinese authorities to such action. Calling this an understatement is putting it mildly. As we are all aware, China is our largest creditor and plays an increasingly significant role in our economy. China has every reason to be concerned about how the U.S. economy is being managed and whether its investments are secure. Such concern undoubtedly extends to the U.S. accounting function which in the last decade has been unable to stop outright accounting frauds such as Enron, WorldCom and Adelphia or the gross overstatements of value of the mortgages and mortgage-backed securities on the balance sheets of so many of the major financial players -- Fannie, Freddie, Lehman, AIG, etc. I suspect that Chinese authorities must be bemused, to say the least, to contemplate why their accounting industry requires special scrutiny from the same U.S. regulators who have done so poorly in their own sphere of influence, at a time when the U.S. is so beholden to China.
The second article discusses the bankruptcy and resulting asset sale of a Gulf of Mexico shallow water oil drilling rig supplier, Seahawk Drilling Inc., largely because of the increased impediments to issuance of permits for shallow water drilling following last year's BP's deep water oil spill in the Gulf. Michael Bromwich, director of the principal federal agency overseeing permit issuance, acknowledges the impact of such impediments: "We know the pace is not as fast as some would like, and we regret the impact the permitting process has had on companies and individuals." Such expressions are fine, but woefully insufficient at a time of such high unemployment and concern about dependence on foreign oil, not to mention rising oil prices. What would be infinitely better would be actually making a high priority within the agency the elimination of superfluous barriers -- it was deep water drilling, not shallow water drilling at issue in the BP episode -- to domestic energy production, which have dire economic consequences.
If the President is going to push high tech solutions, which will have little macroeconomic significance for many years, to our energy problems (ie. electric and hybrid cars, solar panels, etc.) the least he can do is devote and cause those under him to devote at least equal attention to what we can do with no environmental risk to expedite the efforts of those producing significant amounts of energy today.
If the President is serious about making over the regulatory environment to make it conducive to 21st Century needs and activities, he will find plenty of low hanging fruit, such as situations of this nature. We don't need studies and task forces for this purpose; we just need the common sense to tell regulators to get their own house in order before worrying about someone else's and to consider whether their actions are in accordance with actual circumstances.