Seeks action on financial markets
Washington, DC - Senators Mike Crapo (R-Idaho) and Chuck Schumer (D-New York) have included an amendment to S. 761, the America COMPETES Act, to call attention to challenges facing U.S. financial markets. The first part of the amendment highlights findings that U.S. capital markets are losing their competitive edge in the face of intensifying global competition in initial public offerings (IPOs), over-the-counter (OTC) derivatives, securitization, and traditional lending. The second half of the amendment expresses the sense of the Senate about what steps should be taken to bolster the competitiveness of this essential sector of the U.S. economy. S. 761, designed to improve America's commitment to education and technology, was approved by the Senate on a vote of 88 to 8."The challenge we are facing is that U.S. capital markets are losing their competitive edge in intensifying global competition," Crapo said. "A shrinking proportion of international companies are listing shares on U.S. stock exchanges and the fast-growing OTC derivatives market is growing more rapidly elsewhere. This problem is well-documented and it is time that we take a more aggressive approach to addressing America's competitiveness on the world's financial markets. "America's financial centers, particularly New York, are in great danger of losing their international pre-eminence," Schumer said. "If we continue on with the status quo, within the next ten years we will go from being number one, to becoming a marginalized regional market - spelling disaster for New York, and for all of America. The effects of a decline in our financial sector would be felt in across our economy. We cannot ignore the growing competition we face from abroad, and we've got to make changes so that our financial centers remain competitive. This amendment takes a critical first step toward restoring our competitiveness.""This situation poses an ongoing risk to our economic growth, technology innovation, and educational advantage as a nation," Crapo added. "Our efforts should be on all of our lending, trading, and investment banking areasâ??finding more skilled individuals and balanced and effective legal representation and guidance. This amendment expresses a sense of the Senate that these financial areas are indeed critical to U.S. competitiveness on the world market."Crapo said studies and statistics note that the declining position of the U.S. financial market goes beyond the natural evolution of the world market to more controllable issues that can be easily addressed. As an example, he points to a study of initial public offerings (IPOs) which shows U.S. offerings down two-thirds since 2001 while European offerings expanded by 30-percent during the same period. "IPOs are critical to our economy because when a company goes public, it creates capitalâ??and that means jobs and investment opportunities with great potential payoffs," Crapo noted. "The risk-taking exemplified by IPOs is in the most important sense the critical fuel of a market economy.Crapo says the Crapo-Schumer amendment calls on the Congress, the President, regulators, industry leaders and other stakeholders to increase attention and oversight on financial policy matters as well as better coordination between federal and state financial regulatory agencies to avoid conflicts. Among the specific recommendations the amendment seeks are:â?¢Congress, the President, regulators, industry leaders, and other stakeholders should take the necessary steps to reclaim the preeminent position of the United States in the global financial services marketplace; â?¢The federal and state financial regulatory agencies should, to the maximum extent possible, coordinate activities on significant policy matters, so as not to impose regulations that may have adverse unintended consequences on innovativeness with respect to financial products, instruments, and services, or that impose regulatory costs that are disproportionate to their benefits, and, at the same time, ensure that the regulatory framework overseeing the United States capital markets continues to promote and protect the interests of investors in those markets; â?¢Given the complexity of the financial services marketplace today, Congress should exercise vigorous oversight over federal regulatory and statutory requirements affecting the financial services industry and consumers, with the goal of eliminating excessive regulation and problematic implementation of existing laws and regulations, while ensuring that necessary investor protections are not compromised.Crapo and Schumer received letters of support regarding the amendment from several financial groups including the NYSE Euronext, NASDAQ, American Bankers Association, the Business Roundtable, United States Chamber of Commerce, Financial Services Forum, Investment Company Institute, International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association. More information on the Crapo-Schumer amendment and the America COMPETES Act is available on Crapo's website at http://crapo.senate.gov.