Secretary Paulson Remarks on Financial Markets
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Secretary of Treasury Mr. HENRY PAULSON JR. Hello. A strong financial system is essential - not Wall Street, not for banks, but also for Americans. If our markets operate, people throughout our economy - Americans want to buy a car or a house, families borrowing to pay College, innovators borrowing on the strength of a good idea for a new product or a technology, business and the financing of investments, job creation. And if our financial system is under stress, millions of Americans are working consequences. The government has a responsibility to ensure that our financial system is regulated. And in this area, we can better offer. In sum, the ultimate beneficiary thanks to improved financial market regulation America’s workers, families and businesses - both small that large. Today, I am happy for the release of the Treasury’s Financial Blueprint for Regulatory Reform. Or perhaps I should say - to the extent that in recent days, media reports - I am glad that, in order to submit information on the release of these Blueprint for Regulatory Reform. We started the process leading to the latter report, a year ago, in March 2007, when convened by industry leaders and policy makers for a conference on capital markets of competitiveness. The conference participants came to the conclusion that our current financial rules could more effectively promote the stability and load capacity of financial markets and a more competitive service sectors. So, in addition to our other initiatives in the capital markets, in June of last year, we began to work on a Blueprint for a structure of financial regulation, which would be more efficient and better suited to modern financial markets . When we announced that we are working on such a Blueprint, other than some enthusiastic scientists, a few did not notice. Today, of course, the capital markets as well as financial rules, in any mind. As recent events have shown, investor protection and market efficiency and stability are essential to competitiveness. Far from inconsistent with each other, they are mutually reinforcing. We are in a period of stress of the financial market since last August. Markets are new rates and reassessment of risk and how should we wait, it is increasingly difficult in times like these. We know he has a bottom casing to correct this agitation and housing remains by far the greatest risk to our economy. How do we work during this period, our highest priority must be given to the limitation of their impact on the real economy. I have the utmost confidence in the reliability, flexibility and the strength of our economy and our capital markets. We are focused on maintaining stability, regularity and fluidity of financial markets and to ensure that banks continue to support the economy through loans to consumers and businesses. Our town is to work cooperatively with regulatory some very difficult periods. Last week, I once again my support for the extent of damage and the recent initiatives taken by the Federal Reserve. The Fed should have the information needed to play its role as the temporary liquidity to non-banks. But it would be premature to assume that these institutions have permanent access to the Fed’s discount window, and the constant monitoring of the Fed. We learn from the experiences of this temporary placement, and the lessons are a way forward. Our first priority is more urgent, and the upheaval of the capital market and housing, the slowdown and that is our priority until the situation is resolved. With few exceptions, the recommendations of the Blue Print should not and shall not be implemented until the current market situation, the difficulties are past. Some of these recommendations may be a reaction to the reality of the day, but not as they are. The Blue Print addresses complex and long-term problems that are not decisions are taken in stressful situations, and should not be performed, at a greater burden on a market already under pressure. These ideas require long-term thinking and discussion will not be solved, or even this month of the year. Let me also recall that two weeks ago, the chairman of the Working Group on Financial Markets appeared a number of recommendations, including questions of rating agencies, securitization, mortgage and the creation of OTC derivatives . They are a reaction to the policy of the current market situation, disturbances, reducing the chance that we have to repeat our current problems. We will see, focuses on those recommendations would be implemented to improve the functioning of financial markets. But we are not going to try to implement them at a pace, or in any manner affected, as our first priority in employment in this market during the difficult period. Before describing our Regulatory Blueprint, I will briefly describe why the upgrade of our financial legal structure is essential. Evolution of our system of financial regulation Our current legal structure has not been built for the modern financial system, with its diversity of market players, innovation, the complexity of financial instruments, the convergence between financial intermediaries and platforms for integration global and networking between financial institutions, investors and markets. In addition, our major financial services companies are becoming more complex and difficult to manage. Much of our current regulatory system was designed under the Great Depression, and he by the reaction - a model for the creation of regulatory authorities in response to innovations on the market or on the market stress. We have five backwardation federal regulators, in addition to the regulatory authorities. We ranges securities and futures regulators. And one of our greatest regulating financial services, insurance, relies almost exclusively on the State Plan. Most of the response of the legal sense at the time they were created, but as we are in the current financial markets, the lack of an overall design is clear. The Bush administration’s 1991 study, also known as the “Green Book”, which for many changes in the global financial regulatory overhaul, the Gramm-Leach-Bliley Act (GLBA) of 1999. The law on the important changes in the financial position of the legal structure broader affiliations of financial services through a financial holding company, structure. But they also receive regulatory agencies separately in the traditional model of securities, futures, insurance and banking segments. This division of labour is in contradiction with the increasing convergence of financial services providers and products. It creates the jurisdiction of disputes between the regulatory authorities and a result is likely that some financial services and products are exported to foreign markets more adaptive. This complex structure can invite regulatory arbitrage, in which models are elected is based on the structure of regulation, or worse, on the basis of the regulatory authority. The regulators remain at the stage of innovation, but they are in a rigid structure, it is not easy to customize how the financial services industry. The current system promotes the demands and the two important issues of regulation, making the Ritzen. In other words, I do not think it is just or fair are responsible for our current legal structure of the market in revolt. How do we work during this period in our regulatory authorities to cooperate, as appropriate, in recognition of its roles, responsibilities and authorities. They also work in cooperation with its global partners. They share information, if necessary, to reduce and avoid duplication, try the jurisdiction of the conflict. We are pleased to be experienced from a sense of common responsibility for the public good. I am not sure that more regulation is the answer, or even more effective than regulation can prevent that periods of financial market stress that, obviously, occur every five to ten years. I suggest that we should and can have a structure for the world in which we live, this is a more flexible, more that can adapt to change, which will allow us to better cope with the inevitable market disruptions, improved the protection of investors and consumers, as well as the capital markets in the United States to remain the most competitive in the world. It is a complex subject deserves a lot of attention. Those who want quickly as advocates of the label Blue Print “plus” or “minus” Regulation on the simplification of this critical debate and inevitable. The Blue Print is on the structure and tasks - and not the provisions of each company write. The advantage of the structure of the responsibility to show us that, as a regulatory agency for each goal. Few, if any, the defense of our current system balkanized optimal. |