Since 2008, important reforms have helped the financial sector to meet the needs of its customers. The financial sector’s bedrock foundation was a source of strength that has helped to support businesses and consumers when the pandemic hit. As we emerge from the devastation of that crisis, the financial services industry will play a key role in leading a strong economic recovery and allowing the American economy to reach its full potential.
To achieve that goal, the Chamber’s Center for Capital Markets Competitiveness recently released The Growth Engine, a report with over 100 recommendations to modernize financial regulation and spur growth on main street. The report details collaborative opportunities the incoming Biden Administration and the 117th Congress have in enacting forward looking policies.
Top recommendations in the Growth Engine include:
- Enact Policies Expanding Access to Capital to Jumpstart the Economy and Close the Racial Wealth Gap
- Implement Corporate Governance Reforms to Improve Investor Protections and Growth Companies from Small to Large
- Review and Update Liquidity and Capital Requirements for Banks
- Reform Supervision of Banks so It is Tailored for Individual Institutions and Improves Communication with Regulators
- Increase Oversight over the Financial Stability Board and Other International Standard-Setting Bodies
- Transform the Consumer Experience by Expanding Access to Digital Channels for Financial Services
- Expand Consumer Choice and Access to Credit
- Enact Legislation that Makes Structural Reforms to Financial Regulators and the Rulemaking Process
The financial sector is focused on the pressing issues facing Americans, and industry leaders recently spoke about their work at an event hosted by the Chamber to debut the Growth Engine report. The report is a long-term plan, but also addresses issues that that merit the immediate attention of policymakers including the development of a more inclusive financial system, updating regulations to promote a digital economy, and improving oversight of the Financial Stability Board.
Our members have spoken passionately about the need to develop a more inclusive financial system that provides fair access and opportunity for all Americans. Every company is approaching this challenge differently including reviewing the makeup of its workforce, examining the products it offers, and directly investing in underserved communities. For example, some companies like Citigroup are placing their funds with minority owned and/or operated depository institutions to lend out. The Chamber has called on Congress to enact multiple reforms such as expanded funding for Community Development Financial Institutions and enactment of the Improving Corporate Governance Through Diversity Act of 2019.
Companies have also discussed operational changes in reaction to COVID-19, including investing in new technology and cutting through outdated red tape unfit for a digital economy. One change that would improve the consumer experience is permitting asset managers to provide more documentation to investors in an electronic format. Additionally, if Congress were to update 20-year old laws for use of electronic signatures, it would make it easier to sign up for a myriad of products or update contracts. Similarly, the new Congress should update electronic notarization requirements.
Firms are also all keeping a close eye on the Financial Stability Board (FSB) and other international standard setting bodies, whose work is influential but oftentimes unnoticed, given it could pressure U.S. authorities to adopt rules inappropriate for our financial system and economy. International coordination is essential given our global economy and interconnected financial system, but Congress should make sure this work does not happen behind closed doors given the U.S. is expected to issue regulations in line with international agreements even though they have no legal force. For example, the FSB recently signaled it will issue a recommendation for reforming short-term funding markets and the International Association of Insurance Supervisors (IAIS) is pushing forward with a global Insurance Capital Standard.
We also hope policymakers will consider other proposals in the Growth Engine, such as legislation directing the Securities and Exchange Commission (SEC) to improve capital formation for startups, creating a pro-growth framework for digital assets like cryptocurrencies, and making structural improvements to regulators like the Consumer Financial Protection Bureau (CFPB) to improve the regulatory process.
The nation still has 10 million fewer jobs than it did before the pandemic intensified in March, and at the current pace of hiring, it would take until February 2022 to regain the jobs lost to the pandemic. To accelerate job growth, we believe that President-elect Biden and the 117th Congress should make it a priority to focus on providing credit to main street businesses. Doing so will revitalize our economy and keep the American economy competitive in a global economy.