Comment Text:
I am among the many individuals across America who have believed that a notion of fairness had been and should be the philosophy that underlies the work of government regulators. In college in the 1970's I well remember a course that I took that focused on business regulations to protect consumers from monopolistic business practices. That course would no longer be relevant because decisions made over the years caused a reevaluation of business practices and government regulations such that in many sectors or our economy very large firms are able to have almost unavoidable impacts on entire sectors of the economy. We saw this quite clearly with the financial crisis our country faced not long ago. That crisis shook the confidence of many small investors as well as threatened the financial integrity of our entire nation. While many Wall Street firms have recovered handily, there are thousands and thousands of individuals and families whose lives have been forever changed. They have lost their homes. They have lost their retirement savings. They will never be made whole. Despite much-touted relief plans, they have not been rescued like those whose own deeds in the financial scandals led us all to the brink of ruin. (And, because of the rescue, it may be possible that those most responsible for the crisis still do not comprehend the full impact or severity of their deeds since "business as usual" returned to many firms involved.)
The credibility of the financial marketplace is, in my opinion, very much still "on trial" in the mind of the average investor and citizen. We do not trust the large corporations, and Wall Street banks to act in the greater public's interest. They have demonstrated that they are incapable of doing so. They have demonstrated that they need a greater framework of regulations to limit what they can and cannot do.
Effective oversight of the $700 trillion global derivatives market is a key to meaningful reform. Because this market is inherently global, risks can be transferred around the world with the touch of a button. The proposed guidance you have issued on cross-border application of Dodd-Frank derivatives rules shows that you understand the importance of this issue. But the proposal contains multiple loopholes that could allow foreign affiliates of Wall Street banks to escape regulation. Big U.S. banks and other major U.S. derivatives users are global corporations with hundreds if not thousands of foreign affiliates. If we don’t regulate them across all sectors and environments, we can’t regulate them anywhere. Please make this guidance stronger to ensure that new Dodd-Frank derivatives protections will directly apply to the full global activities of all important participants in the U.S. derivatives markets. Allowing loopholes to remain in the regulations undermines that important notion of fairness... undermining those companies who do business solely in the U.S. and further undermining the trust that Americans have in their financial system.
