Hearing Of The Senate Banking, Housing And Urban Affairs Committee: The State Of The Securities Markets

Statement

Hearing Of The Senate Banking, Housing And Urban Affairs Committee: The State Of The Securities Markets

SEN. CHARLES E. SCHUMER (D-NY): Thank you.

Thank you, Chairman Cox.

Thank you, Chairman Dodd, for holding this hearing. And I just want to say, you know, one of my great concerns here is as the world evolves we face new challenges in financial regulation. For a long time, there was sort of an exquisite balance between (convinced ?) investor protection and entrepreneurial vigor. There's always a tension and that's part of America and that's part of a good part of our system.

The introduction of a global economy, of course, has challenged that, because foreign countries can have different -- will have different systems of regulation. Some have very weak systems of regulation and, all too often, companies go to the weakest system because it's less regulation for them. It'll hurt them in the long run, but in the short run it certainly hurts here.

Then there are some others -- and maybe Britain is one of these -- that have a better system of regulation, at least in certain aspects -- not every aspect, but certain. Having one regulator, having a results-oriented regime may be a better way to go. And this puts huge challenges on us, and of course, my concern is both catholic and parochial. Catholic because I want to see the best system for everybody -- it's good for investors, good for everything. But parochial because I certainly want to see New York stay the financial center.

Now I think we can achieve that balance. I think we can adapt to the modern world and at the same time have a careful balance between "entrepreneurial-ness" and investor protection. And in fact, Mayor Bloomberg and I had McKenzie do a report which had 25 recommendations how we could improve the competitiveness of America and New York and at the same time not hurt investors.

And I want to praise you, because as you know, the mayor and I have met with you on several occasions, as well as with Secretary Paulson and Chairman Bernanke and others, and we're moving in this direction and it's very helpful.

We've tried to craft -- most of the recommendations in the report you can do on your own that apply to the SEC. And exploring mutual recognition -- that is the recognition of comparable regulatory authority by the SEC -- issuing clearer guidance for the implementations of Sarbanes-Oxley, as Senator Bennett mentioned, particularly on materiality, which is an issue that is important; taking steps toward recognizing international accounting standards so foreign companies don't have to totally change their books around when they come here, all of these are very important steps. All of these were recommended in our report. And I want to thank the SEC for moving forward in that direction.

Having said that, we have a long way to go. The increase in financial service jobs in London exceeds the increase in New York. And there are other centers that are going to be nipping at our heels.

So we have to continue moving in this direction, certainly continuing investor protections -- not throwing out the baby with the bathwater, but updating ourselves, learning the best of other systems and secure in the fact that we have the best talent. Everyone agrees with that here in America. And with a good system of regulation -- an updated system based basically on the basic values we've had for a long time, we can clearly stay number one.

So I thank you.

And thank you, Mr. Chairman.

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