Sarbanes urges stricter fiscal oversight

The U.S. subprime meltdown will result in more-stringent banking regulations, according to former Sen. Paul Sarbanes, who helped draft sweeping corporate-accountability legislation six years ago, according to published reports. The Federal Reserve and Securities and Exchange Commission need to play a larger role in investment banking, he said while speaking at a conference of the Cambridge, Mass.-based Institutional Investor Educational Foundation in Paris on Friday. Mr. Sarbanes, a former Democratic lawmaker from Maryland, who served in the Senate from 1977 to 2007, is best known for co-sponsoring the Sarbanes-Oxley Act of 2002 in response to accounting and corporate fraud that led to the collapse of Houston-based Enron Corp. and Worldcom Inc. of Clinton, Miss. He described the recent steps taken by the Fed to facilitate the acquisition of The Bear Stearns Cos. Inc. by JPMorgan Chase & Co. and establish new credit facilities as “unprecedented steps to avoid systemic risk.” Both firms are based in New York.