Washington, DC - More than three-quarters of American companies of all sizes report that the cumulative effect of financial regulations adopted over the past six years is making it harder for them to access the financial services they need, a new U.S. Chamber of Commerce Center for Capital Markets Competitiveness (CCMC) report released today found.
“After six years of adopting rule after rule, financial regulators should begin to focus on the impact of regulation on economic growth,” said David Hirschmann, president and CEO of CCMC. “This survey shows that the crush of financial regulations has a direct, downstream impact on companies that rely on a diverse system of financial services providers to help them manage both their short-term and long-term financial needs and risks.”
The report, Financing Growth: The Impact of Financial Regulation is based off of a survey of more than 300 corporate finance professionals, including CFOs and treasurers, which examined the impact of financial services regulatory reform on the availability and cost of the products and services most crucial to the growth of Main Street businesses.
“Companies rely on every size and type of bank, from community and mid-sized institutions, to regional, national and global banks to meet their diverse needs. Under the cumulative weight of financial regulations, banks are abandoning markets and products that are essential to fueling the American economy. It’s time for regulators to take stock of this impact and ensure financial regulation doesn’t further limit America’s Main Street economic growth,” Hirschmann added.
In many cases, those companies now face the choice of either paying higher costs or losing access to key products, services, and providers, the survey found. Increasingly, those costs are then passed on to consumers. This is particularly true of services needed to manage short-term liquidity and cash as well as the ability to obtain credit or issue debt.
Main findings from the report include: main street businesses have diverse financial services needs, and they need access to a variety of products and services to succeed; regulatory efforts to reduce risk in the financial systems are causing reducing the financial services choices and increasing costs for non-financial companies; and without a robust financial services supply chain our nation cannot finance adequate economic growth.
“A strong financial services sector is the essential fuel to powering economic growth, making it vital for us to have a dialogue on how to get financial regulation right,” Hirschmann continued. “The bottom line is that companies need access to wide range of financial service providers who will compete for their business. Without this we cannot have a full growth agenda or economy.”
Financing Growth: The Impact of Financial Regulation was released during an event hosted by CCMC, in partnership with the National Association of Corporate Treasurers, Association for Financial Professionals, and the Coalition for Derivatives End-Users, which looked at emerging challenges facing Main Street companies, including access to capital, liquidity, and risk management.
Since its inception in 2007, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.