Live From the Summit: Tom Donohue

Mar 30, 2011

Chamber President and CEO Tom Donohue focused his remarks on the five most critically important Dodd-Frank implementation issues. Here’s a quick rundown:

  • Consumer Financial Protection Bureau. The scope of the agency and its accountability remains a major concern. If not used carefully, the CFPB’s tremendous power to go after bad actors could cause serious collateral damage to America’s job creators. The Chamber wants CFPB to establish an effective and efficient structure, empower consumers through appropriate disclosure, and prevent duplicative regulation through coordination with state, federal, and prudential regulators. A bipartisan, five-person commission would provide more balance and accountability in the bureau’s management than a single, powerful director, and additional oversight by Congress would be an appropriate check on the bureau’s extensive powers.
  • Derivatives. Main Street end-users should continue to be able to use derivatives in an effective way to manage their legitimate business risk—without sidelining billions of dollars in productive capital and costing tens of thousands of jobs. Regulators must carefully follow the text of—and intent behind—the Dodd-Frank Act, not rush into making mistakes, and give impacted companies and others the opportunity, and time, to meaningfully participate in what is a fundamental reshaping of our derivatives markets.
  • Systemic Risk. There are significant concerns with several aspects of the proposed rulemaking regarding the regulation of certain nonbank financial companies. Over-designation of these firms for more stringent regulation by the Federal Reserve will have severe unintended consequences, including stunting economic growth.
  • Whistleblower. The law allows for a substantial financial reward for whistleblowers who voluntarily provide the SEC or CFTC with original information about violations that lead to a successful enforcement action. The goal is admirable, but the program will lead to a host of adverse and unintended consequences, including eviscerating corporate compliance and reporting programs, unfairly smearing innocent companies, and flooding the SEC and CTFC with an avalanche of poor-quality information.
  • Corporate governance.The corporate governance measures stuck into Dodd-Frank are ill advised, politically motivated, and unrelated to the financial crisis. One-size-fits-all corporate governance is always a bad idea—leading to less, rather than more, effective governance. But giving narrow, special-interest shareholders unique leverage at the expense of other shareholders is just plain wrong.

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