Op­pos­ing view: Our sys­tem is more reg­u­lated and cap­i­tal­ized

USA TODAY International Edition - - NEWS - Ken­neth E. Bentsen Jr.

U.S. cap­i­tal mar­kets are where in­vestors, small and large, put cap­i­tal to work to drive in­no­va­tion, eco­nomic growth and job cre­ation. Our mar­kets have long funded the best ideas and en­ter­prises, en­abling busi­nesses to grow, gov­ern­ments to in­vest in in­fra­struc­ture, and in­di­vid­u­als to save for re­tire­ment and ed­u­ca­tion.

That is not to say the fi­nan­cial cri­sis and en­su­ing Great Re­ces­sion were not painful — they cer­tainly were. And while our eco­nomic re­cov­ery has been sub­par by his­tor­i­cal stan­dards, Amer­ica re­cov­ered much more quickly than other economies, due in large part to the re­siliency of our mar­kets.

The de­vel­op­ment and growth of our cap­i­tal mar­kets has been bol­stered by a ro­bust reg­u­la­tory frame­work put in place 85 years ago and con­tin­u­ally up­dated, fo­cused on in­vestor pro­tec­tion, trans­parency, safety and sound­ness.

The re­sponse to the fi­nan­cial cri­sis was no ex­cep­tion. An un­prece­dented num­ber of new reg­u­la­tions were adopted, af­fect­ing ev­ery­thing from mar­ket struc­ture to cap­i­tal stan­dards. While pol­i­cy­mak­ers have rightly ques­tioned whether some rules over­shot the mark at the ex­pense of growth, there’s no ques­tion our sys­tem is both more reg­u­lated and cap­i­tal­ized.

For ex­am­ple, all U.S. banks are sub­ject to higher cap­i­tal re­quire­ments. For the largest banks, ag­gre­gate Com­mon Eq­uity Tier 1 — the core mea­sure of a bank’s fi­nan­cial strength — is up 72% since the cri­sis. No in­sti­tu­tion is “too big to fail,” with the largest sub­ject to liq­ui­da­tion to shield tax­pay­ers and mit­i­gate sys­temic risks.

Deriva­tive trans­ac­tions, a crit­i­cal fi­nanc­ing tool for busi­nesses, agri­cul­ture and gov­ern­ments, are now sub­ject to a ro­bust new reg­u­la­tory regime and mar­ket struc­ture.

No other coun­try’s mar­kets come close to the depth and ef­fi­ciency of ours, as ev­i­denced by the size of our gross do­mes­tic prod­uct, the strength of our com­mer­cial sec­tor, our lev­els of home­own­er­ship, and our vast na­tional in­fra­struc­ture. A key rea­son is the longterm strength of our mar­kets and fi­nan­cial sys­tem.

Ken­neth E. Bentsen Jr., a for­mer in­vest­ment banker and mem­ber of Congress, is pres­i­dent and CEO of SIFMA, the voice of the na­tion’s se­cu­ri­ties in­dus­try. He is also chair­man of En­gage China, a coali­tion of 12 U.S. fi­nan­cial ser­vices trade as­so­ci­a­tions united in sup­port of high-level en­gage­ment with China.

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