It is rare to hear the Chairman of the Board of a public company publicly trash government bureaucrats, especially one from a car part manufacturing company, which is heavily dependent on government regulatory approvals. But, here is Frank Stonach, Chairman of Magna, an innovative (and inexpensive) Canadian company with sales to every major and minor auto manufacturer on every continent (from the Chairman’s Letter in the 2010 MGA annual report):
One of the factors influencing (my) decision to give up voting control of Magna was the increasingly restrictive rules governing the management of companies. I believe regulators have put in place excessive rules that stifle the market’s creative forces – namely, the innovative managers, entrepreneurs and inventors who are the engines of new wealth creation. We need to loosen the regulatory straightjacket and create a simpler, more clear-cut regulatory framework that allows business more room to innovate and expand.
Maybe he is emboldened because he sold shares and is retiring. Regardless, most entrepreneurs think that the regulatory burdens are reaching a breaking point.
In my business, with the stroke of a pen, bureaucrats have decided that investors who were sophisticated before when they had $1 million of net worth including the value of their primary residence are no longer sophisticated unless they meet that amount excluding the value of their primary residence. They are also considering raising the cutoff amount to $2.5 million. It is not as if these distinctions would eliminate the Madoffs of the world, the ostensible targets of the regulation. The Madoffs of the world prey on the uber wealthy because “that is where the money is.” This is probably another example of congress paying back those who contribute to election campaigns. In this case it is the managers of large hedge funds who would like their pesky competitors to disappear. Who is John Galt?