SEC Chairman Cautions Congress on Buyout Curbs

Chairman David Ruder, echoing the sentiments of Treasury Secretary Nicholas Brady, cautioned today that legislation to curb corporate leveraged buyouts could make stock markets skittish.

Testifying before the Senate Finance Committee, Ruder said markets were “still skitterish and nervous” and could be made more so by congressional action on takeover activity. The committee is holding hearings on leveraged buyouts to determine whether action is needed to curb the activity.

Ruder also told reporters after his address that he believes leveraged buyouts are generally good for the country, although they raised questions whether some companies were becoming overloaded with debt.

But comments by committee Chairman Lloyd Bentsen that he was uncertain what to do about the growing debt of U.S. corporations underscored the fact that Washington is likely to move very cautiously in this sensitive area.

“I’m looking for a way to balance the attractiveness of equity and debt,” the Texas Democrat said in an opening statement on the second day of hearings by his panel.

“I want a cure that isn’t worse than the disease. We haven’t yet found it,” he said.