It really comes as no surprise that our readers don't like Sarbanes-Oxley. The 2002 law is known for its blinding paper trail and sky-high costs. In last week's Feedback poll, in fact, some 60% of voters stated that SOX wasn't worth its time and cost. Obviously, there are nuances that the poll could not delve into. But commentator Gail Davis Cardwell can.

"If I had to make a simplistic statement, the costs are not sustainable. I'm going to focus on Section 404, which is the management assessment of internal controls. Our members have experienced high costs associated with implementation. Therefore we've also focused on what we hope will be a regulatory shift to address the challenges we're having. Keep in mind that the MBA represents the entire spectrum of the finance industry. So, in addition to mortgage bankers, we also represent investors in securities and services. To some extent we want to ensure that securities investors have the transparency of information that prepares them for a prudent investment and enables them to weigh risks and rewards.

"Real estate became a $2.6-trillion industry by year-end 2005. We've been a very good investment in terms of fundamentals and we've become a mainstream investment, which brings greater scrutiny. It also brings in foreign capital, so we're in the global marketplace and we want to make sure we remain competitive in that global marketplace. We don't want to compromise the transparency of information but we also want to make sure the regulations we issue and the way they're implemented maintain that transparency as opposed to causing confusion.

"Early last year, MBA submitted a letter recommending that the SEC issue regulatory guidance to help reduce members' high cost of reporting under section 404. The letter attributed the costs primarily to ambiguities in the guidance and offered some suggestions for reducing those costs. There was no noticeable reduction in cost this past year and so we submitted another letter that describes our members' views of the state of reporting under 404 and the changes they feel will bring costs in line with benefits.

"We haven't received a reply yet. We've always had a very productive dialog with the SEC, largely because they have such broad objectives, and they're usually very receptive. We bring to them specific examples of where there's a lack of clarity and how the focus on the process-level controls is being played out in the marketplace. We have some pretty strong and well thought-out recommendations for some significant regulatory changes.

"How do we best meet the broad goals of information-transparency without wasting resources, which costs everyone money--including the auditors--and places our industry at a competitive disadvantage? We're recommending a significant shift--a paradigm shift--in the auditors' focus away from concerns over liability to cost-benefit considerations. The guidelines should describe how cost-and-benefit considerations will be measured so auditors become mindful of both."