Today, the top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), joined CNBC’s Joe Kernen on Squawk Box to discuss the need to open our markets to everyday investors, technology’s role in democratizing finance, and Congress’ reaction to the GameStop situation.
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To watch the full interview click HERE or on the image above.
On modernizing regulation to increase access to markets for everyday investors:
“Well, I think first we have to ensure that existing laws were adhered to. And then, the second question is what antiquated regulations or laws would need to be looked at that perhaps enhanced this event. In particular, what I’m thinking about is the use of technology, the broad innovation, the democratization of capital that we’ve seen in our heavily regulated industries of financial services. This broad desire of average, everyday investors to get access to more sophisticated, more interesting products. And it appears to me that these investors were pretty sophisticated in their action. And so, I want to look at those antiquated rules like the accredited investor standard, and other things along those lines, to ensure that we’re not cutting people off from additional access to markets, and therefore leaving them to activities like we’ve seen with GameStop and a few other tradable securities.”
On the impact of technology on markets and investing:
“Well look, it’s like saying that the fax machine, the telephone, Twitter, Facebook— that we were going to ban these technologies so that people can’t have this type of communication. You can’t put technology back in the box. Innovation is here, we have to embrace it, broaden access to our markets, we have to broaden access to our financial products, we have to speed the pace of settlement, a number of things like that so that we can meet the real-time needs of average, everyday people. What I’m seeing here is this larger case, which is average, everyday investors are cut off from the access that insiders like c-suite members of companies, and hedge funds, and private equity naturally get. And that accredited investor standard has bifurcated our markets into a highly prosperous lot, and then the rest. So, let’s fix that problem so you can actually have these capital flows go to the useful and best place.”
On the importance of caution and the role of government:
“Final thing I’ll say here Joe, is that people should not invest money they can’t afford to lose, I think that’s very, very important. Buyer beware here, we’re not sure how this thing ends, but what we need to respect though is that these are people that are making decisions with their own money, and as a government official I shouldn’t be telling them how to do that.”
Watch the full Squawk Box interview HERE.
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