After President Obama signed financial regulatory reform into law, most Americans probably believe financial reform is complete -- that the work is done. In reality, the reform process is just getting started.
Over a dozen federal regulators must now begin a lengthy rulemaking and implementation process, requiring over 250 new rules to be studied and written. This is an unprecedented undertaking the results of which will impact nearly every American.
Americans rely on financial services to help meet their needs: for retirement, education, homeownership and indeed every aspect of their lives. The over $145 trillion in financial assets held in the U.S. will be impacted by these rules, nearly a quarter of which are held in the personal sector. An estimated 34 percent of Americans' total assets are in financial assets, most of which are in retirement accounts, mutual funds, stocks and bonds.
The financial services industry raised nearly $1.6 trillion in equity and debt capital for businesses last year and a further $475 billion for state and local governments and projects. Nearly six percent of U.S. gross domestic product is generated by the financial services industry, which employs 7.6 million people nationwide.
As the former Director of both the Office of Thrift Supervision and the Resolution Trust Corporation during the savings and loan crisis and its subsequent clean up, I know firsthand how important the next 18 to 24 months will be to American businesses and families.
While no financial reform legislation in recent history compares in terms of scope and complexity, important lessons can be learned from the past. Successful rulemaking is not an isolated process. It is transparent and bipartisan. To craft the best rules possible, regulators should take into account different perspectives from financial industry experts including those from market participants, the legal community, academia, think tanks and consumer advocacy and industry groups. In the end, after reviewing these comments, regulators must reconcile these varied viewpoints to reach a common goal: to agree on a pragmatic set of rules that regulate the financial services industry, prevent future crises and create a strong economy that fosters healthy competition, job creation and growth in our communities.
Federal regulatory agencies and their staffs will be faced with the daunting task of sifting through hundreds if not thousands of comment letters from a wide array of stakeholders and deciding which ones are the most important and substantive to consider. Their critical role goes beyond interpreting each part of the legislation and analyzing the technical merits of each comment, but also understanding how the financial rules will impact American businesses, individual investors and families.
Will the new rules ensure that the costs of credit remain accessible for businesses and individuals to meet their financing needs? What is the impact of the final rules on companies' competitiveness when they are tapping the global capital markets? Will the rule raise the price of basic goods and services?
Too much is at stake for our financial system and America's fragile economy not to ensure these final regulations are written the right way. Over the next two years, regulators will be reviewing and writing rules that range from increasing oversight of complex financial instruments such as derivatives to enhancing protections for individual investors and consumers. Then, they will need to enforce the new regulations.
The rulemaking process is long and can be complex, but it is also the most open and democratic way of ensuring that the voices of key stakeholders are heard. We in the financial services industry, along with other stakeholders, remain committed to being a thoughtful contributor to this open process. We need to get these regulations right. And, we should never forget the painful crisis and economic recession that made financial reform necessary.
Tim Ryan is president and CEO of the Securities Industry and Financial Markets Association (SIFMA), a leading securities industry trade group representing securities firms, banks, and asset management companies in the U.S. and Hong Kong.
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