Thank you, Mr. Chairman. Before I begin, I should note that amongst his many qualifications, Bill Donaldson is a life-long New Yorker. He was born and raised at one end of the state in Buffalo, and he has lived and worked for almost his whole life at the other end of the state in New York City. I must point out, Mr. Chairman, that his experiences span two of the greatest cities in this country.
Mr. Chairman, I believe, and I am sure you and my distinguished colleagues will agree, that today's hearing is likely to be the most important hearing this Committee will hold this year.
For today we are not only nominating the next Chairman of the Securities and Exchange Commission, but we – the Members of the Senate Banking Committee – are taking the first steps to get our nation's economy back up and running again.
I have long believed that much of the current economic downturn is due to a crisis of confidence. People have lost faith in trusted institutions. That trust must be restored before we see any meaningful growth in our markets, and before any of the other measures we are considering at the Federal level will have effect. As James Madison observed, "The circulation of confidence is better than the circulation of money." And nothing is more damaging to the confidence of investors than a leaderless and rudderless SEC. I know the SEC can, and I believe our nominee will, play an active role in restoring investors faith in the integrity of their markets.
As I think of the many challenges facing the new head of the SEC, I am reminded of the famous Chinese curse, "May you live in interesting times." As we well know, these are interesting times.
On the one hand, we need to rapidly conclude the investigation and reforms of the securities industry that has resulted in the "global settlement" amongst brokerage firms, the SEC and the states attorneys general.
At the same time, I feel strongly that it is time we recognize the importance of our capital markets and financial services firms to our nation's economic success. I believe our markets are truly national assets. I know that our financial services firms lead the world in innovation and excellence. The SEC has a vital role to play in ensuring they remain a major competitive advantage of the United States.
The new head of the SEC must also reckon with enormous, new complexity in our financial markets. Today billions of shares trade hands daily on the major markets in the United States. In a short period of time, we have gone from largely a single equities market, the New York Stock Exchange, with a few dominant firms trading on regular hours, to many new markets, after-hours trading, online trading and an enormous array of players. More Americans are exposed to these markets, with, for the first time, over 50% of Americans now owning stock in some form or another. These statistics speak to the magnitude of the challenges before the new head of the SEC.
Finally, as we know, the SEC itself is undergoing enormous change. As it attempts to reckon with changes in its markets and the companies it oversees, it also is determining its own mission and mandate for the future. Given an expanding mandate, I am glad that the Administration increased the SEC's funding in its most recent budget. The SEC cannot enforce the law without the quality and quantity of professionals it requires. Those funds are also critical to ensuring the SEC has the resources to effectively enforce the governance mandates set forth in Sarbanes-Oxley.
With these challenges in mind, Mr. Chairman, I believe Bill Donaldson's background ably qualifies him for the job.
Mr. Donaldson has started and run a major Wall Street firm, Donaldson Lufkin & Jenrette, one, I might add, that was known for being ahead of the curve of change in the financial services industry.
Mr. Donaldson has also served as Chairman of a major exchange, the New York Stock Exchange, during a period of tremendous market growth.
Mr. Donaldson has also been on the other side of the table. He understands the risks, responsibilities and challenges of an executive, board member and investment professional. He has a perspective grounded in reality, and is aware of the unpredictable, fallible and, at times, flawed human factor in our markets.
Finally, Mr. Donaldson is known as a man of professional integrity. He is a straight shooter, who, I believe, will work well with both political parties. Those are personal qualities required of the head of the SEC.
In summary, he has the seasoned perspective of an issuer, underwriter, exchange, and investor. The very constituencies the SEC must consider in all of its work.
No doubt, Mr. Donaldson will live in interesting times. The challenges of the industry will be one thing. My hope is that the challenges of the political process will not outweigh the important work the SEC needs to do. Our financial markets need to move forward. Our securities firms needs to move forward. And the SEC needs to move forward.
I am confident that Bill Donaldson's life-long involvement in the financial industry, coupled with his demonstrated service to his country, has adequately prepared him for the role of SEC Chairman.
I should conclude by saying that I have had the pleasure of knowing Mr. Donaldson for a long time. And I am happy to see that the Committee has not disqualified him for service based on that fact.
Mr. Chairman, I am delighted to introduce Bill Donaldson, and I support his nomination to be Chairman of the Securities and Exchange Commission.
Thank you, Mr. Chairman.