Capital Markets Are at Risk

By Thomas J. Donohue, President and CEO, U.S. Chamber of Commerce

 

You're a small or midsize company ready to take the next steps in your expansion plan, but you lack the necessary capital. Where do you turn? The U.S. public capital markets have long been an attractive option, providing the seed corn from which millions of smaller companies have blossomed. The ease of accessing public capital in the United States has helped solidify our status as the best place in the world to start, invest in, or grow a business.

 

However, we haven't been very good stewards of our capital markets system, and we risk losing our edge. We are falling backward in terms of modern regulation, technology, and a fair legal environment. Our capital markets are governed by a patchwork of federal and state laws and regulations-some dating back to the 1930s-and enforced by numerous agencies that often have overlapping and conflicting jurisdictions.

 

In addition, recent regulations implementing Sarbanes-Oxley legislation have produced far more costs and headaches than benefits. As a result, companies are flocking to foreign capital markets that are more efficient and less costly than ours.

 

For the past year, a bipartisan commission established by the U.S. Chamber has been studying these challenges and will recommend improvements in March. The Chamber will then attempt to work with Congress to achieve reforms that strike the appropriate balance between protecting investors' rights and ensuring an efficient system that presents companies an affordable option for financing their expansions.