Capital Markets

Where We Stand

On July 21, 2010, President Obama signed the Wall Street Reform and Consumer Protection Act, a bill that will bring sweeping changes to the way the financial services industry is regulated, and the way that financial products are delivered to consumers. A primary keystone of  this legislation is the new Bureau of Consumer Financial Protection (CFPB), an agency that will have unprecedented powers and authority to determine the types of financial products consumers can choose from. In fact, the bill extends far beyond traditional financial services products to a vast segment of the economy - in short creating a new regulator for much of the business community. 

It will have broad authority that stretches far beyond the financial services industry – and will impact nonfinancial companies, not primarily in the business of consumer finance. By design, the CFPB will push the market towards only standard, low risk products; reduce the choices available to consumers and small business owners; and drive up the costs of available credit. The agency has a key choice between enforcing consumer laws and improving consumer disclosures or using its unprecedented powers to restrict consumer choices, limits consumer credit, or otherwise politicize the allocation of credit.

The U.S. Chamber is committed to working with the various government agencies on implementing the new law and ensuring the voice of business and engine of economic growth is fairly represented. The Chamber’s Center for Capital Markets Competitiveness (CCMC) works toward advancing America's global leadership in capital formation by supporting Capital markets that are the most fair, efficient, and innovative in the world.

The Securities and Exchange Commission Rules on Proxy Access

Dodd-Frank gave the SEC the authority to promulgate rules providing for proxy access. On August 25, the SEC announced it would adopt changes to the federal proxy and other rules to facilitate director nominations by shareholders. Now shareholders are eligible to include nominees in the proxy materials if they own at least 3% of shares for at least the prior three years. After conducting legal analysis, the Chamber and the Business Roundtable (BRT) have joined together to file a lawsuit to overturn the Proxy Access rule on September 29, 2010.

More Information:
U.S. Chamber's press release
Additional information about Proxy Access (PDF)
What Other People are Saying about Proxy Access (PDF)
U.S. Chamber and BRT Motion for Stay (PDF)
Filed Petition (PDF)

OTC Derivative Regulation

While Dodd-Frank will achieve the objectives of increased transparency and reduced systemic risks, the strength of the end-user exemption will be decided by the SEC and the CFTC through the significant authority granted to them by Congress. Key terms that will be defined by rules will shape the how companies mitigate their risk. A narrow interpretation could result in end-users that are hedging, and not speculating, to fall under a bank-like regulatory regime. In addition, should the agencies impose substantial new costs on end-users – either directly or indirectly through their counterparties, they will significantly disincentive hedging by companies across the country, and will result in more, not less, risk in the system.

Systemic Risk

Dodd-Frank created the Financial Stability Oversight Council (FSOC) to monitor systemic risk.  Key issues include how the FSOC will be structured, what input businesses will have, what information will be required and the structure of the subsequent compliance regimes, and how companies and industries will be deemed to be "systemically significant."

Whistleblowers

Dodd- Frank gave the SEC additional regulatory enforcement powers to draft new rules to increase protections and incentives for whistleblowers. These new rules (to be proposed within 270 days from enactment) will financially incent employees to circumvent a company’s internal complaint process and report the issue directly to the SEC by awarding the whistleblower between 10 and 30 percent of total monetary sanctions. 

Financial Crisis Responsibility Fee: Issues for Policymakers

The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness released a study today conducted by Hal S. Scott, Nomura professor of international financial systems, Harvard Law School that highlights the unintended consequences the proposed “bank tax” would have on access to credit, job creation, and the overall economy.

The study, "Financial Crisis Responsibility Fee: Issues for Policymakers," concludes that imposing the tax now – more than three years in advance of the legislative deadline – could lead to a $1 trillion decline in lending, reducing access to credit for job creators and consumers at a time when the economy is still struggling to recover.

Download the study | Read the press release