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Despite professions of independence, the Committee on Capital Markets Regulation has been accused of being sympathetic to the Bush Administration.

To anyone who has ever grumbled about shareholder lawsuits or Sarbanes-Oxley, last fall’s debut of the Committee on Capital Markets Regulation should have been welcome. Comprising 22 members from the worlds of business, law, and academia, the CCMR announced that it would examine the effects of regulations on the competitiveness of U.S. capital markets. But both the committee and its first report, released in November, have come in for criticism.

For one, the committee has been accused of being sympathetic to the Bush Administration, despite professions of independence. Critics note that Treasury secretary Henry Paulson publicly praised the committee’s efforts, and that one of its co-chairs, John L. Thornton, was a top executive at Goldman Sachs during Paulson’s tenure there. Meanwhile, the other co-chair, Columbia Business School dean R. Glenn Hubbard, was formerly chairman of President Bush’s Council of Economic Advisers.

CFO.com: Reform Effort Rebuked

Rules governing U.S. public markets are driving businesses to overseas exchanges and private sources to raise money, damaging the competitiveness of the American capital markets, a high-profile panel of chief executives and academics co-chaired by the former economic adviser to President Bush said Thursday.

The report to the White House makes a number of recommendations, including revising parts of the Sarbanes-Oxley Act — the landmark set of corporate-governance regulations passed in 2002 — that affect small companies, pursuing criminal cases against corporations in only exceptional circumstances and allowing shareholders of certain companies to vote on so-called “poison pills.”

“The threat to U.S. competitiveness appears to be real and growing,” says the report, which was authored by the Committee on Capital Markets Regulation. The committee is co-chaired by Glenn Hubbard, dean of Columbia Business School and former White House economic adviser, and John Thornton, a former president of Goldman Sachs who is now chairman of the Brookings Institution.

“There needs to be better cost-benefit analysis” about the consequences of regulation, said committee director Hal Scott, a Harvard law professor, at a press conference Thursday. “We need to do a better job on that.”Read the report.

The report makes 32 recommendations spanning shareholders’ rights, securities-fraud enforcement and the U.S. regulatory process and is the latest downbeat assessment of the impact of the Sarbanes-Oxley Act on U.S. companies and markets. The committee suggests stiffening the definition of a “material weakness” in a company’s financial statements and also says that foreign companies should be exempt from the law’s accounting standards if they meet similar requirements in their home countries. The report comes shortly before a Dec. 13 Securities and Exchange Commission meeting about the law, at which regulators are expected to propose significant changes in the way the law’s accounting provisions are implemented.

MarketWatch: U.S. competitiveness is at risk, says report