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Paulson gets some high-priced analysis

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KAI RYSSDAL: Treasury Secretary Henry Paulson was in need of some advice today about how to regulate American businesses. So he convened a special panel in Washington. He invited people like GE CEO Jeff Immelt and billionaire Warren Buffett to share their thoughts. And most of the guests had the same message — along the lines of what the Secretary’s thinking: that there are too many rules that cost companies too much money to abide by. Pat Loeb has more.

PAT LOEB: Secretary Paulson was careful not to take a position on whether business has been over-regulated since the Enron scandal. But he did ask rhetorically whether the U.S. should move toward what he called a principles-based regulatory system. In his words, “We must rise above a rules-based mindset that asks, ‘Is this legal?’ and adopt a more principles-based approach that asks, ‘Is this right?'”

Treasury Department official David Nason agrees:

DAVID NASON: in an overly rules based society, that the focus becomes too much on compliance and checking-box exercises as opposed to kind of principles and guidelines that guide correct behavior that everyone is striving towards.

Nason says reforms such as the Sarbanes-Oxley bill have worked. But the Treasury Department is willing to revisit some of them.

Business leaders have been saying for months that over-regulation is costing America money. They say fewer European companies want to jump through the hoops required to run operations here and to list their shares on U.S. markets.

Billionaire Warren Buffett said though he feels like a teenager with Playboy when he reads financial statements, the amount businesses have to issue now is overwhelming.

But consumer and investor groups argued the reforms were adopted because of scandals that defrauded thousands of Americans of their life savings.

Amy Borris of the Council of Institutional Investors says she’s not sure how principle-based regulation would work.

AMY BORRIS: It sounds great, but we’re a society where people want to know exactly what they have to do.

Borris says it’s safer to spell out what is expected of business.

I’m Pat Loeb for Marketplace

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