US economy being 'killed' by too many rules and regulations, says US consultant

April 1, 2008, Miami, FL, USA: Over-regulation of its financial markets is "killing" the economy of the United States, according to an Arizona-based financial due diligence consultant.

"It has become so time-consuming and costly to comply with all of the bureaucracy that many businessmen are going to other countries to implement their ideas and enterprises," Burke Files told OffshoreAlert.

"Throw in the constant threat of litigation in a lawsuit-happy country and you have a situation where the cons of doing business in the US are outweighing the pros for more and more businesses."

Investors who do keep faith in the USA are more inclined to finance private enterprises, rather than public entities, in an effort to minimize the layers of bureaucracy and the risks of being sued, he says.

To support his arguments that more investors are taking their money elsewhere and that there is a fundamental shift from public to private financing, Files cites figures that he says originated from the CATO Institute, which is a libertarian think-tank based in Washington.

He says these show that:

In 2000, 50% of the value of the world's Initial Public Offerings was raised in the USA. However, in 2005, it had fallen to just 5%;
In 1995, the USA's share of total equity capital raised in the world's top 10 markets was 41%. In 2006, it was just 28%;
The listing premiums on US stock exchanges have declined substantially; and
Since 2003, private equity fundraising in the US has exceeded net flows into mutual funds, and private transactions have accounted for more than a quarter of publicly announced takeovers.

"Some of the decline in the US share of world equity markets is no doubt due to the increased efficiency of major foreign markets," says Files. "However, the dramatic increase in the use of private US markets is important evidence that regulation and litigation are contributing to the flight of many companies from the US public markets and to private and foreign markets."

According to Files, "Regulation has become about taking away freedoms and choices without giving a safe harbor under which a business can operate. Each new regulation gives litigators yet another avenue under which they can sue a business and bleed it dry, often with no good reason.

"It does not have to be like this. There must come a time when you say 'enough is enough'."

Hear this debate live at the 6th OffshoreAlert Financial Due Diligence Conference

Burke Files, who operates Financial Examinations & Evaluations Inc., will expand on his views during a debate entitled 'My Way or the Highway: Is the United States Regulating Itself Into Financial Decline?', which will be held at the 6th OffshoreAlert Financial Due Diligence Conference in Fort Lauderdale, Florida on April 13-15, 2008.

In the other corner will be Jack Blum, who, for many years, served as a staff attorney for the U. S. Senate and specializes in the areas of bank and securities firm compliance, congressional investigations, international financial crime, money laundering and offshore tax evasion.