|FOR IMMEDIATE RELEASE:||CONTACT: CHRISTI HARLAN|
|Thursday, April 13, 2000||202-224-0894|
Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, made the following comments today prior to the testimony from Federal Reserve Board Chairman Alan Greenspan on the regulatory and structural environment for the changing securities markets:
"The Banking Committee asked Chairman Greenspan to talk to us today about market structure, to help us ferret out whether what some people call market fragmentation is a problem or if competition is at work and also to help us make a decision about whether a central limit order book, imposed by government, is a solution to a problem or whether it is a form of centralization that has the potential of limiting competition and hurting the consumer.
"Today we are doing something that this committee and the Congress and the nation often does and that is to call on the expertise of Chairman Greenspan. Chairman Greenspan has become something of a national asset, not just in doing his job at the Federal Reserve, but by being the nation's teacher and adviser on these kinds of issues.
"We have held a series of hearings on market structure. We're going to have another hearing in Chicago on May 8. At that point, we will begin to wrap up the hearing phase of our work.
"In this effort, I have been guided by three basic principles. One is that the fees that are collected on securities issues and securities transactions should be used solely for funding the government regulatory effort that we undertake to provide markets that are secure and honest and transparent.
"We should never have fees that become general revenue. But we are now collecting fees that are five times the amount of money we need under any circumstance to fund the Securities and Exchange Commission. Over five years, we will literally take some $10 billion out of the pockets of teachers and all private and public employees who are trying to fund their retirements.
"We are taxing every saver, every investor in America – taxing thrift itself, taxing the seed corn of our economy – to fund general government. This is a tax, a use of fees that were never meant to be used for that purpose, and a tax that is grossly inefficient, in my opinion.
"The second principle that I have been guided by in this debate is that I believe we need to let technology lead. I don't think anybody is smart enough to figure out where the markets are going as we go through this dramatic change.
"I think it is very important that we let technology lead and that we let regulation follow. I believe that we need to be guided by what I call the economic equivalent of the Hippocratic oath: First do no harm.
"Let's let the technology that has come on the market in terms of instantaneous communication and greater access to knowledge and information than has ever existed, let's let it work its way through the market and then see what problems arise and what need for laws and regulations there is.
"Finally, I am convinced that we are long overdue for a thorough review of every securities law and every securities regulation that we have in place. We need to look at those laws and regulations to determine whether or not they are adding value by strengthening the markets, making them more attractive and making them servants of our economy in terms of creating wealth and prosperity.
"We need to know whether the benefits of those laws and regulations exceed the cost they impose on the markets. This is critical because we are in an era when markets can move almost instantaneously.
"There is virtually nothing we could do within the lifetime of most of the people in this room or nothing that could occur under our system of government that could induce us to move to another country. But I think it is clear that that is not true of financial markets.
"We have already seen evidence in the futures industry of the migration of a market to Europe. This is a market that we invented, that we dominated, and because of overregulation by government, because of a slowness to adopt new technology, we now have the German market larger and growing faster than our own markets.
"I don't want to see this happen to the New York Stock Exchange or the NASDAQ. I don't think God wrote it down anywhere that the United States would always dominate the financial markets. I think that's a right that we have to earn.
"This committee has taken it upon itself to try to do everything we can to keep capital markets in the United States, knowing that the only way we can keep them here is to have enlightened laws and enlightened regulation. We have to be sure that this goose that lays the golden egg is well fed, that we keep water in the pond and keep the dog chained up and away from the goose."