Lessons From Motown; Wall Street's loss of global market share has reached a crisis level. In 2005, 24 of the globe's 25 largest IPOs took place overseas.

Byline: Daniel Gross

A world-beating made-in-the-U.S.A. industry, long insulated from foreign competition, dominates global markets and cheerily doles out stratospheric wages and benefits. As it begins to lose market share, executives write off international competition as a low-quality nuisance. When the foreign ripple becomes a wave, corporate chieftains look to the government for help and blame regulations and plaintiffs' lawyers for their woes, rather than confront their own untenable cost structure.

Detroit and the auto industry, circa 1985? Yes. But it also sounds an awful lot like New York and Wall Street, circa 2007.

Wall Street's loss of global market share in initial public offerings has reached a crisis level. In 2005, 24 of the globe's 25 largest IPOs took place overseas. So did nine of the 10 largest of the class of 2006, including the record $20.6 billion IPO of Industrial & Commercial Bank of China, which was staged in Hong Kong. Last month, DLF, the Indian real-estate company, held a $2.25 billion IPO--in Mumbai.

American worthies have responded by doing what they always do come crunch time: they formed a blue-ribbon commission. The Committee on Capital Markets Regulation last November issued a well-publicized interim report that blamed regulations such as the Sarbanes-Oxley law for scaring off foreign companies. To be sure, the culprits behind the apparent demise of the once dominant U.S. IPO industry are legion: globalization, mercantilism, national pride and, yes, Sarbanes-Oxley. But the report glided over the fact that Wall Street, like Detroit, now suffers an enormous cost disadvantage (and a declining quality advantage) vis-A -vis foreign competition.

In the United States, the standard underwriting fee remains unchanged from its historic level of about 7 percent--that's the price a bank like Merrill Lynch charges to usher equities into the public markets. A 2006 report by Oxera Consulting (commissioned by the London Stock Exchange and the City of London) found that median fees for companies going public on the LSE were about 3.25 percent. The Bank of China paid a 2.5 percent underwriting fee when it went public in Hong Kong last year. And UBS charged a paltry 1.5 per-cent for taking Western Mining public in Shanghai. A Chinese company seeking to raise $1 billion could thus save $55 million by avoiding New York.

Michael Bloomberg, the billionaire mayor who knows a thing or two about luxury products, famously said of Gotham: "It's a high-end ...