|FOR IMMEDIATE RELEASE:||CONTACT: CHRISTI HARLAN|
|Tuesday, February 29, 2000||202-224-0894|
Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, at a full committee hearing today in New York City made the following opening statement on the Financial Marketplace of the Future:
"This is a very important hearing for the Banking Committee, for the Congress and, I believe, for the country because in a formal way, we're beginning to look at markets and how they work with the goal of ensuring that America is always the dominant country in providing the markets that raise capital.
"Our greatest economic asset is our capital markets. It is very important that we have government policy, both law and regulation, that enhances the functioning of those markets.
"We live in a world where capital is highly mobile, and everyone is acutely aware that it is as easy, using a laptop computer, to trade on the financial exchanges in Germany as it is to trade on the New York Stock Exchange. If we want this goose that routinely lays the golden egg to stay in America, we have to try to provide an environment that will enhance its staying here.
"As we begin this debate, I have three principles that I intend to follow. Number one, fees collected for the purpose of funding the regulation of the financial markets should not become sources of general revenue.
"Today we are collecting five times as much in the way of user fees as we are spending in providing the regulatory structure in which our financial markets operate. That is an outrage because it takes billions of dollars from the teachers retirement programs in New York and Texas, from mutual funds, from IRAs, from 401Ks, and from individual investors.
"Senator Schumer and I, along with Senators Grams and Mack, have introduced a bill to roll those fees back and set up a permanent structure to ensure that we have the resources we need for quality regulation while assuring that over the next five years $7 billion of excessive fees aren't taken from investors.
"As part of that bill we are providing a change in the pay structure at the Securities and Exchange Commission to be sure that we recruit and retain the best people to provide regulation. If you want enlightened regulation you have to have good people. And the fact that we're losing people at an alarming rate from the SEC is something that has to be fixed.
"The second principle I intend to follow in this debate is to let technology lead. We are in the midst of tremendous change in our financial markets. We don't know where these changes will take the markets.
"I think there is a temptation under these circumstances to say that we ought to figure out where the market is going and set a regulatory structure for it. I think that's impossible; I think it's counterproductive.
"What I intend to follow is the economic equivalent of the Hippocratic oath: First, do no harm. I think technology should lead, and once we know where the markets are going, then we provide the regulatory structure to allow them to function efficiently.
"Finally, with a competitive world market, where we could lose our preeminence in financial markets, it is imperative that we go back and look at every regulation and every law that governs our financial markets and that we then apply what I would call a value-enhancing test. That test is: does this regulation, does this law, add more value to our markets than it adds costs?
"If regulations and laws do not meet that test, they ought to be changed.
"So, this is a very important hearing today. There are great differences of opinion about the future of our financial marketplace. I think it is important that we came to the center of these financial markets.
"I never come to Wall Street, I never come to the financial markets in New York City, that I don't become acutely aware that this is the nerve center of American capitalism. And knowing what capitalism has meant to America and the world, to me this is a holy place."