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May 23, 2007
Financial competitiveness - part 7
According to Alan Murray's column in today's Wall Street Journal Wall Street's Capital 'Crisis' Moves to Back Burner, the battle cry has turned into a whine:
last week came the dull denouement. The Treasury announced it was creating yet another study committee...as if the previous three hadn't been enough. And it named former Securities and Exchange Commission Chairman Arthur Levitt as co-chairman, along with former SEC chief accountant Don Nicolaisen. Mr. Levitt has told anyone who asked that hand-wringing about Wall Street's competitiveness is, as he delicately puts it, "absolute garbage."
. . .
At an event sponsored by the Council on Foreign Relations in New York last week, which was held after Mr. Levitt agreed to head the new committee, but before the committee was publicly announced -- the former SEC chief feistily attacked most of the major recommendations of the so-called Paulson committee. "The IPO issue is a nonissue," he declared.
Murray seems to agree with that assessment:
Of course, it was never that much of a crisis to begin with. Wall Street moguls made much of the statistic that only one of the 20 largest IPOs in 2005 occurred in the U.S. But that oft-cited statistic provided a pretty narrow and misleading window on Wall Street's overall health. Moreover, it was distorted by the fact that some of the largest IPOs were former state-owned enterprises in China and Russia that listed elsewhere for nationalist reasons, and that might have had a hard time meeting U.S. listing standards anyway.
Last week, [Treasury Undersecretary Robert] Steel himself cited a compelling set of numbers showing that the U.S. financial markets remain "second to none."
I'm glad to hear that folks are backing off the rush to deregulate in the name of competitiveness. However, I hope that there will be continued thought given to ways to improve our financial markets. Two areas -- not included in the current discussions -- come immediately to mind: how financial markets deal (or don't deal) with intangibles and whether the short term focus is hurting long-term innovation. A study (or studies) that looked at those two issues would be a huge step forward in assessing the competitiveness of our financial markets in the I-Cubed Economy.
Posted by Ken Jarboe at May 23, 2007 12:01 PM
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