U.S. Chamber Disappointed with Administration's Financial Regulatory Proposal

Opposes new regulatory layers, calls for comprehensive reform

David Hirschmann discusses the proposed reforms on CNBC

WASHINGTON, D.C.—The U.S. Chamber of Commerce today welcomed the administration's proposal to regulate U.S. financial markets, but expressed disappointment with its plan saying it unnecessarily adds new layers of regulation and does not provide comprehensive reform to the current broken system.

"Our evaluation of the administration's plan is based upon its ability to solve three fundamental problems with our financial regulatory system: ineffective regulation, regulators that are not well coordinated, and regulatory gaps that missed significant problems that occurred in our markets," said David Hirschmann, president and CEO of the Chamber's Center for Capital Markets. "While the Administration has made several positive recommendations, we're concerned that overall, the proposal simply adds to the layering of the system without addressing the underlying and fundamental problems. We can't simply insert new regulatory agencies and hope that we've covered our bases."

The Chamber supports:

• An overhaul of existing regulators, and greater coordination and transparency.
• Registration of hedge fund advisers, including appropriate reporting to regulators.
• Establishing a platform for greater global regulatory cooperation.
• An exit strategy for programs established by the Congress, Treasury and Federal
• Reserve to address the financial crisis. Absent a clear, timely, and predictable exit plan, private capital will not be fully deployed.

The Chamber does not support:

• A stand alone consumer protection agency that cannibalizes regulatory expertise and ads yet another regulatory layer.
• A systemic risk regulator that duplicates existing regulation or permanently designates specific financial institutions as systemically significant, thereby designating them too big to fail. There can be no explicit or implied expectation that losses at large firms will be socialized to the taxpayer.
• Proposals, such as so-called proxy access, that advance the agenda of activist special interests at the expense of good governance.
• Mechanisms for sustained government intervention in the private economy. We will only support resolution authority if it is narrowly tailored to achieve the orderly bankruptcy and dissolution of firms.
• Inflexible regulation that stifles responsible innovation. Regulated entities should be able to get timely answers to allow for responsible innovation within the regulated structure. We cannot drive or force innovation into dark unregulated corners here or around the globe.

"The Chamber will strongly support regulations that will make the regulatory system more effective," said Hirschmann. "The administration's proposal is only the first step. We look forward to working with Congress to achieve real reform that will spur the efficient capital formation needed to secure real long-term economic growth and job creation."

The U.S. Chamber is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.

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