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WASHINGTON - The Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing today to review three legislative proposals to improve the struggling U.S. economy, which grew an abysmal 0.5 percent in the first three months of the year.
“Despite the big promises that have come with granting vast and in some cases unlimited authority to the federal bureaucracy, most Americans aren’t buying the argument that a bigger Washington leads to a bigger paycheck – or even to a paycheck at all,” Subcommittee Chairman Scott Garrett (R-NJ) said. “Fortunately, our Subcommittee has for five years tried an alternative approach which seeks to empower entrepreneurs, investors, and small businesses – not bureaucrats. Today, we continue our important work with three pieces of legislation.”
The bills reviewed by the Subcommittee today are:
- The SEC Regulatory Accountability Act, which would require that the Securities and Exchange Commission (SEC) to determine that the benefits of any regulation it is considering actually outweigh its economic and regulatory costs;
- The Investment Advisers Modernization Act, which would allow private capital to continue to play a critical role in our economy by reducing unnecessary bureaucratic requirements that hinder capital investments in small and middle market businesses; and
Key Takeaways:
- True, sustainable economic growth that increases paychecks and creates opportunity for all comes from Main Street, not Washington. Yet excessive Washington regulations make it harder for small businesses on Main Street to grow and create jobs.
- Economic growth depends upon the efficient allocation of capital.
- The SEC must be data-driven and needs to conduct robust cost-benefit analysis of its proposed regulations.
- Investors benefit when the regulatory regime provides companies who invest in startups, small businesses, and generally with relief from unduly burdensome regulatory demands. Efficient capital formation, for example, not only benefits the companies raising funds but also provides investors with more attractive investment opportunities.
Topline Witness Quotes:
“I believe these three bills will go a long way toward rationalizing and modernizing the federal securities laws; making the SEC more accountable to Congress and the investing public; enhancing the efficiency of U.S. capital markets; facilitating small business capital formation; and protecting investors” – Daniel M. Gallagher, President, Patomak Global Partners and former SEC Commissioner
“The Investment Advisers Modernization Act of 2016…would provide a win-win solution for investors and investment advisers alike. The proposed legislation provides a modernized, clear and rational regulatory framework for advisers to comply with, given current realities. This will allow for regulatory oversight that is efficient and meaningful, while allowing private equity advisers to continue to focus on growing companies, providing important returns to our investors, and most importantly, creating new jobs, now and into the future.” – Joshua Cherry-Seto, Chief Financial Officer, Blue Wolf Capital Partners, LLC
“Smart regulation requires a re-thinking of the process for developing and implementing regulations. A final regulation should be the start, not the completion of this process. The current means of producing cost benefit analysis is limited and subject to potential manipulation… The SEC Regulatory Accountability Act will allow the SEC to better understand the markets and products it regulates, thereby preventing the regulatory dead-zones that were a contributory cause of the 2008 financial crisis.” – Tom Quaadman, Senior Vice President of the Center for Capital Markets Competitiveness, U.S. Chamber of Commerce
“[T]he Center believes that the services provided by proxy advisory firms are an important part of the proxy process that helps investors discharge their duty to vote their proxies. Yet, we agree with former SEC Commissioner Dan Gallagher and many other commentators that a more thoughtful approach to the regulatory structure of the industry is necessary, given the substantial influence that proxy advisors have in the proxy process. The Center supports the Proxy Advisory Firm Reform Act to begin that process of reshaping the oversight of the industry.” – Timothy J. Bartl, Chief Executive Officer, Center on Executive Compensation
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