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Hearing of the House Financial Services Committee - H.R. 6066, The Extractive Industries Transparency Disclosure Act


Location: Washington, DC


You know, when we deal with problems like we're talking about today and trying to solve them through more regulation I'm always concerned about what might happen, because too often there are unintended consequences. If we regulate personal behavior to improve peoples' lifestyles, there's always an attack on their personal liberties and unintended consequences.

When we deal in economics, the same thing occurs. So the intentions are always good, whether it's dealing with personal behavior or economic behavior, and I understand the concerns that are expressed here.

And I think we can all agree that greater transparency regarding the dealing between companies listed on American stock exchanges and foreign governments regarding the giving those companies rights to extract that country's natural resources are a good thing. However, there are legitimate questions over the legislation 6066 is the proper way to achieve this goal, and that the legislation may well have consequences that weren't intended.

This is what happened with Sarbanes-Oxley. Everybody was very excited about Sarbanes-Oxley and there were a total of three of us that voted against it. And yet, it was the fear of what happened with Enron, and yet Enron was taken care of by the market as well as fraud laws they got settled and we didn't need more regulations.

So this idea that we just have to put more regulation doesn't solve these problems. One thing that happened after Sarbanes-Oxley, there was delisting from American capital markets which continues, and that really doesn't help us.

I think delisting from the capital markets puts pressure on the dollar; pressure on the dollar is another reason why they need more dollars to buy Euros and why oil prices go up and why gasoline is up -- one of the reasons -- as well as the problem in Nigeria.

In addition, since many of the extractive industries are authoritarian governments, I doubt that simply requiring transparency will result in the type of political reform of those countries desired by the supporters of this legislation.

It won't solve that problem. Probably a much more effective way of dealing with that subject is to break the resource curse, at least in the oil nations, by making or encouraging more competition by expanding our domestic production, encouraging greater development of alternative fuels, and even nuclear power, plus ending those foreign policies that prop these regimes up which is frequently the case too.

We're always helping people; we always help the people, send over food programs, and end up as weapons in these authoritarian regimes. It's happened numerous times, and I think this approach lends itself to misallocating resources and ending up having unintended consequences.


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