OVER THERE.(The Talk of the Town)

These look like fat years on Wall Street. In 2006, the city's biggest financial firms made more than thirty billion dollars in profits. Trading volume on the major exchanges is climbing, while the merger market is booming. And bankers and traders have reaped the benefits, earning close to twenty-five billion dollars in bonuses last year. Yet over the past few months, amid this bounty, a chorus of Cassandras has emerged. "The United States is losing its leading competitive position," a private-sector commission on capital markets said in a November report, and last week Mayor Michael Bloomberg and Senator Charles Schumer released a study arguing that New York City's financial dominance was being eroded, thus putting tens of billions of dollars and tens of thousands of jobs at risk. These reports argue that overzealous regulation--as epitomized by the Sarbanes-Oxley Act, the anti-fraud law passed after the Enron and WorldCom scandals--is making the U.S. an increasingly unalluring place to do business. Unless such regulatory excesses are curbed, they say, New York will soon lose its position as the world's financial capital.

What the New York report calls "the most dramatic illustration" of this slide toward disaster is a statistic that may seem rather esoteric: in recent years, the number of foreign companies choosing to go public in New York has plummeted, with Europe and Asia snapping up much of the business. America's share of so-called "global I.P.O.s" is now only a third of what it was in 2001, and in 2005 twenty-four of the world's twenty-five biggest I.P.O.s were held abroad. In other words, foreign companies, wary of our arduous regulations, are supposedly shunning America. And this signals a grim future, in which foreign firms stay away and, eventually, American companies may abandon the New York Stock Exchange and Nasdaq to list their shares elsewhere.

To businessmen weary of compliance officers and internal controls, this seems like a compelling narrative. But it's a radically oversimplified explanation of what's been happening. To begin with, many of the world's biggest I.P.O.s in recent years have been privatizations of state-owned companies in Europe and China, which for political reasons were never likely to happen in the U.S. Also, corporate executives prefer to take their companies public in bull markets, which improves their chances of getting a high price for their shares, and foreign markets have lately done better than the U.S. market. London and Hong Kong are also cheaper than New York: the commissions that investment banks charge to take companies public there can be about half what they are in the U.S. More broadly, globalization--a force that Wall Streeters applaud when it comes to textile plants and call centers--has increased competition. Many ...