Top Bushies, including Cheney and Treasury Secretary Paulson, are talking with Wall Street honchos this week about how to make life easier for the securities industry by getting rid of some post-Enron regulations and shielding the industry from liability from shareholder lawsuits. The thinly-veiled rationale for this mutual kiss-up is that American securities markets are supposedly becoming less competitive in world markets.

As I’ve noted before, the idea that American capital markets are losing their competitiveness is complete and total nonsense. Returns to the financial sector in the U.S. continue to be higher than in any other sector of the economy – now higher than ever before. Investment bankers are awash in money. Top traders took home $40 million last year. So are hedge fund managers, several of whom cleared a billion. Private-equity managers, the managers of large pension and mutual funds, and the rest, are raking in more money they know what to do with.

It’s true that the percent of big global initial public offerings listed on U S stock exchanges is declining while the percent of initial public offerings done through financial centers in London, Hong Kong, and elsewhere is rising. (In 2006, the U.S. accounted for 28 percent of all new equity raised in the world’s largest financial markets, down from over 40 percent in 1995.) But this doesn’t mean Wall Street is becoming uncompetitive. Capital markets are now global. So of course other financial centers are going to gain a larger share of IPOs. Meanwhile, Wall Street is doing deals all over the world. Mergers and acquisitions in Europe, China, Latin America. Hedge funds taking in money from all over the globe.

American capital markets are fully competitive. America is still the world’s largest magnet for foreign capital. Foreign investors held over $2 trillion of US stocks last year, more than the total stock market capitalization of all other markets except the UK and Japan. In fact, foreign companies that list both on a US and a foreign stock market typically trade at a premium over foreign firms that list only outside the US. Why are investors willing to pay more for listings in the US? Because the US capital market is more stable and transparent, and its tough accounting standards give investors better protection. In other words, because of the very regulations that the Bush Administration and its Wall Street cronies wants to get rid of.

The threat of another Enron or Worldcom hasn’t gone away. Executive suites are still reeling from the scandal of back-dating executive stock options. Small investors continue to be wary. Even if the Street weren’t doing better than ever, even if it weren’t already so competitive it doesn’t know what to do with all its money, this is not the time to deregulate.