Democrats and Republicans Meeting in Davos Agree Financial Regulation is Imperative
- Expect tough financial regulation from the Obama Administration
- Financial regulation will be coordinated to avoid regulatory arbitrage
- Energy package to include nuclear to meet the challenges of climate change
Davos-Klosters, Switzerland, 30 January 2010 − Expect “tough regulation” from the Obama Administration on financial services this spring, as well as an energy package. Addressing participants in a session on “The US Legislative Agenda: A Global Perspective” at the World Economic Forum Annual Meeting 2010, US congressmen and senators confirmed that despite bipartisan differences, there is agreement that financial regulation is imperative.
“There is a degree of bipartisanship, but I don’t think it will make a difference,” said Barney Frank, US Congressman from Massachusetts (Democrat), 4th District; Chairman, Financial Services Committee. “I expect the President to be signing a financial reform package this spring.” Frank noted that the proposed regulatory reform would be done in a coordinated manner. “There will be tough regulation but it will be sufficiently coordinated so that it will not create regulatory arbitrage,” he added.
Susan M. Collins, US Senator from Maine (Republican), acknowledged the “complete failure of regulation” and suggested that a board of regulators or a council should be in place, responsible for identifying systemic risk and black holes. “No matter how skilled (regulators) are, there will be a new risk product or process that will emerge. We need a regulatory system that is flexible enough, for example, to identify derivatives.” Collins pointed out that both Democrats and Republicans agree that the system failed and that regulatory reform is needed. “Whether they can come together, I hope so,” she said.
The challenge of climate change presents an opportunity for the US to break away from foreign energy dependence and to create jobs, according to Lindsey O. Graham, US Senator from South Carolina (Republican). “In his State of the Union Address, President Obama talked about nuclear power, offshore drilling and clean air. That is where America is at. You can disagree with me about global warming, but why don’t you join me to provide the next generation of Americans with cleaner air and purer water and in the process, create jobs?” Graham noted that the President’s comments signalled “significant change”, making it much more likely that a “bill could be put together.”
Brian Baird, US Congressman from Washington (Democrat), 3rd District, said it was “unlikely” that a cap-and-trade bill could be pushed through Congress. “But that doesn’t mean we cannot be an active player in reducing CO2,” he said. “It is important that we do not treat cap and trade as the sine qua non. There are other non-tax ways to achieve this.”
Scott Brown’s victory in Massachusetts could mean a more conciliatory attitude from both Republicans and Democrats. Edward J. Markey, US Congressman from Massachusetts (Democrat), 7th District; Chairman, Select Committee on Energy Independence and Global Warming, pointed out that in energy and climate issues, there was never a day when it was a question of 60 votes. “We all realize we have to work in a bipartisan fashion.”