Capital Markets Initiative

Robust capital formation has long been the hallmark of U.S. economic strength, business growth, job creation and our nation’s international competitiveness.

The recent crisis in financial markets and accompanying recession was in no small part caused by outmoded financial regulations, poor regulatory oversight, and business practices that sought to exploit associated economic inefficiencies.

Strong reforms are needed to restore confidence in the system. However, if done poorly, reform can stifle innovation and put the United States at a relative disadvantage on the global stage.

The Bipartisan Policy Center’s Capital Markets Initiative seeks to create opportunities for bipartisan, political consensus around ideas to strengthen and reform U.S. capital markets. Through this Initiative, the BPC has been working with Congress, the Administration, issue experts, and key stakeholders to strengthen U.S. financial regulations in a number of areas.

Reforms must be significant and crafted in a way to protect investors and consumers, while also ensuring that U.S. financial markets and market participants are allowed to continue to employ the creativity that has been key to economic growth and job creation.

Areas of Focus

  • Derivatives and their Regulation
  • Asset Securitization
  • Credit Rating Agency Reform
  • Systemic Risk
  • Regulatory Framework

Programs
Credit Rating Agency Task Force
Arising from the Financial Regulatory Roundtables, the Bipartisan Policy Center launched a new Credit Rating Agency Task Force in August 2009 to support Congress in its effort to reform credit rating agencies. The BPC Task Force is a technical and expert resource to members of the U.S. House of Representatives Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises as it works to develop legislation that will attract bipartisan support for reforming credit rating agencies, whose systematic underrepresentation of credit risk to investors is widely understood to be a major precipitating cause of the recent financial crisis.

The BPC Task Force is composed of a distinguished group of professors, all leading experts on credit rating agencies, including John Coffee, Jim Cox, Donald Langevoort and Jonathan Macey
John Coffee is a Professor of Corporations and Securities Regulation at Columbia Law School. His principal interests include corporations, securities regulation, class actions, criminal law and white-collar crime.

Jim Cox is a Professor of Corporate and Securities Law. He has published extensively in the areas of market regulation and corporate governance, as well as having testified before the U.S. House of Representatives and U.S. Senate on insider trading, class action and market reform issues.

Donald Langevoort is a Professor of Contracts, Securities Regulation and Corporations at Georgetown Law. Previously, he practiced at WilmerHale before joining the staff of the U.S. Securities and Exchange Commission as Special Counsel in the Office of the General Counsel.

Jonathan Macey is a Professor of Corporate Law, Corporate Finance and Securities Law at Yale Law School, and a Professor in the Yale School of Management. He is the author of several books including the two-volume treatise, Macey on Corporate Laws.

Financial Regulatory Roundtables
On behalf of the House Financial Services Capital Markets Subcommittee, Chairman Paul Kanjorski and Ranking Member Scott Garrett, BPC held a series of bipartisan, educational roundtables for the benefit of its Members on a number of key financial regulatory issues under its jurisdiction.

At each of the sessions, Members heard presentations by prominent financial and policy experts, who represented diverse political and policy viewpoints.

As a result of these Roundtables, we believe Members from both parties are better informed regarding the complex financial and public policy issues confronting the Committee and Subcommittee. In addition, these Roundtables provided an opportunity for Members to discover areas of potential concurrence and compromise, which will be critical as they draft subsequent legislation.

2009 Financial Regulatory Roundtables

  • The Regulatory Reform Problem (MARCH 23rd )
  • Paul Volcker, Larry Lindsey, Eugene Ludwig
    Paul Volcker was Keynote Speaker in the opening session of the financial regulatory roundtable series. Volcker discussed with Members various causes of the current financial crisis. Larry Lindsey and Eugene Ludwig were respondents, and both reinforced Volcker’s opinion that lawmakers should adopt a systemic approach to regulatory reform and “go slowly” to assure reforms minimize unintended consequences.

  • Systemic Risk (APRIL 27th)
  • Jamie Dimon, John Taylor
    Jamie Dimon and John Taylor defined systemic risk and discussed with Members their perspectives on the causes of collapsed credit markets and failed financial institutions. The speakers distinguished between the different regulatory experiences and breakdowns among banks, insurance companies, and other financial entities and offered their ideas on government’s appropriate role in regulating risk while maintaining incentives for robust capital formation.

  • The Role of the Federal Reserve System (MAY 20th)
  • Alan Greenspan, Alan Blinder
    Former Federal Reserve officials Alan Greenspan and Alan Blinder discussed with Members their views on the proper role of the Federal Reserve in the U.S. economy, as regulator of monetary policy and its recently growing role in the formulation and management of fiscal policy. The speakers examined the successes and failures of the Fed’s recent actions and lessons learned in the rescue of Bear Sterns, AIG, and its subsequent lending to support troubled financial institutions.

  • Complex Financial Entities and Instruments (JUNE 2nd)
  • Jim Simons, Sharon Brown-Hruska
    Jim Simons and Sharon Brown-Hruska discussed the role of complex financial entities and instruments, and examined whether there was a nexus between hedge funds and the recent financial crisis. Both speakers expressed opinions on various proposed regulatory reforms specific to derivative instruments.

  • Administration’s Proposal for Financial Regulatory Reform (JULY 7th)
  • Tim Geithner
    Tim Geithner addressed with members various aspects of the President’s financial regulatory reform proposal, including its specific proposed measures on systemic risk regulation, consumer protection, agency consolidation, credit rating agency reform, and derivatives regulation. Geithner expressed the Administration’s willingness to consider other views and urged Congress not to delay in taking decisive action.

  • Administration’s Proposal for Financial Regulatory Reform – Part 2 (JULY 20th)
  • Mary Schapiro, Sheila Bair, John Dugan
    The speakers continued the previous session’s discussion of various aspects of the Administration’s proposal, distinguishing areas where their own regulatory solutions would differ from those of the Administration.