Financial Reform: Let’s Do It Right
Publication Date: April 2010
By Tom Donohue, President and CEO, U.S. Chamber of Commerce
April 6, 2010
With health care behind it, Congress is now turning its full attention to financial regulatory reform.
Any discussion of the capital markets must begin with recognition of how important they are to our economy, job creation, and Main Street revitalization. About 60 million investors rely on our capital markets to help pay for their kids’ college education, buy homes, and build a nest egg for retirement. America’s 27 million small businesses--our principal job creators--rely on them to help start and grow their companies.
The Chamber supports improved transparency, greater consumer protection, closing regulatory gaps, eliminating duplication, and international coordination. We must reach a bipartisan solution that strikes the right balance between effective regulation and unnecessary restraints on capital formation.
It must streamline and coordinate regulators with overlapping authority and allow for continued innovation, competition, and reasonable risk taking. And a reform bill must address the needs of Main Street. Unfortunately, the reform bills being debated in Congress fall short.
The proposed Consumer Financial Protection Agency (CFPA) would be invested with such sweeping powers that it could regulate businesses that have little to do with consumer finance--including tens of thousands of small businesses--simply because of the way they bill customers. By adding confusion to an already confused regulatory process, the CFPA would discourage business investment and job creation.
Proposed legislation also fails to adequately address moral hazard--providing certain firms with government guarantees that encourage reckless risk taking. We cannot allow a regulator to designate--formally or informally--specific financial institutions as “too big to fail.” This would create dozens of Fannies and Freddies across the economy. Nor should we tax financial institutions to prop up their failing competitors.
When it comes to managing risk, Congress should not apply a one-size-fits-all regulatory approach. Financial institutions operate on a variety of different models, and this must be respected. Choice and competition in the market have served consumers and small businesses well, providing them with tailored financial products and more access to capital.
Finally, some things are just non-starters, such as giving shareholder activists the upper hand at the expense of other shareholders even though it has nothing to do with financial reform. With so much at stake, the Chamber is working aggressively to ensure that we get financial reform right by supporting commonsense proposals and opposing those that unduly constrain our capital markets, delay economic recovery, and cost jobs. We want a bill this year--but it must be the right one.
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Originally published April, 2010 Reprinted by permission, uschamber.com, Copyright©, April 2010, U.S. Chamber of Commerce.