We just watched our Sen. Chuck Schumer grill Bernanke about under-regulation of hedge funds large and small and the need to do something to prevent overleverage. Since he’s our Senator and all, we wanted to do him a favour and remind him a couple of years ago that he was calling for less regulation of the financial industry, while warning of — cue the ominous music — the threat from less-regulated London. He and Mayor Bloomberg even penned a WSJ op-ed on the subject.
In 2005 only one out of the top 24 IPOs was registered in the U.S., and four were registered in London. London is gaining ground in other areas too, but it is not only London we need to worry about. Next year, more money will be raised through IPOs in Hong Kong than in either London or New York.
Ah, yes, the good old days in 2006, when London’s IPO marketshare of IPOs was a legitimate worry. He went on.
Based on the work completed so far, there are four factors that bear close attention: globalization of the capital markets, overregulation, frivolous litigation and incompatible accounting standards. The first factor is beyond our control; advances in technology and communication are allowing capital to flow more freely, making it much easier to locate financial activities anywhere in the world. But we can, and must, do something about the other three factors to maintain and expand our competitive edge.
First, what lessons can we learn from other nations’ regulatory systems? Currently, there are more than 10 federal, state and industry regulatory bodies in the U.S. The British have only one such body. Industry experts estimate that the gross financial regulatory costs to U.S. companies are 15 times higher than in Britain. Beyond cost savings, the British enjoy another advantage: While our regulatory bodies are often competing to be the toughest cop on the street, the British regulatory body seems to be more collaborative and solutions-oriented. Read the whole thing>
Chuck! Why didn’t you ask Bernanke about the threat of overregulation when you had the chance?