– By Rob Nichols is president & COO of the Financial Services Forum. The views expressed are his own. —
Reform of our financial supervisory framework is a top priority for the members of the Financial Services Forum, and should be for our nation. In addition to protecting investors, consumers, and shareholders, bipartisan financial regulatory reform will bring much needed certainty to our capital and credit markets and help to fuel our economy and create jobs.
To maintain a position of financial and economic leadership, the United States needs a 21st century framework of financial supervision that protects the interests of depositors, investors, and consumers, and policy holders; ensures the safety and soundness of financial institutions; ensures financial system stability; and ensures an effective and competitive financial marketplace to fuel economic growth and job creation. Stated another way, financial reform must minimize the chances of another fire, while providing the means for effectively fighting another crisis should it occur.
Toward that end, the Financial Services Forum considers the following reforms essential:
• End “Too-Big-to-Fail”: The shareholders and management of financial institutions – regardless of size – should never again be insulated from the consequences of their own mistakes. The discipline of potential failure is necessary to ensure truly fair and competitive markets. Accordingly, Congress should provide the relevant agencies with the legal authority, procedural protocol, required resources, and expertise for resolving even the largest, most interconnected, and complex entities in a manner that preserves public confidence, protects systemic stability, and provides reasonable certainty to customers, shareholders, creditors, and other stakeholders. More effective supervision coupled with resolution authority is the remedy to too-big-to-fail – not the preemptive dismantling of large, healthy, well-managed institutions.