In conjunction with President Obama’s speech today on financial regulatory reform the Chamber has published this open letter in the New York Times.

The Chamber agrees with the President that there needs to be financial regulatory reform and that it has to happen this year. However, the aim of a financial regulatory reform bill should be to allow a system of capital formation that provides for sustained economic growth and the creation of more than 20 million jobs over the next ten years. Trying to ram through a bill to score political points or salve populist urges won’t solve the problems, or allow businesses to expand and create jobs.

As you are watching the President’s speech today, keep a checklist handy to see if these flaws are being tackled:

1. Consumer Protection: The current bill still allows for a bureau that has overly broad powers to regulate Main Street, with an unaccountable director. Increased consumer protections are needed and the Chamber has proposed a plan to get there. But ask yourself, do we really need an economic J. Edgar Hoover regulating the orthodontist?
    
2. Derivatives: More clearing and transparency, no argument. However, corporate end-users need flexibility to use derivatives to bring low-cost products to market for consumers. Check out this article about how derivatives are used to bring beer to the market.
    
3. Ending “Too Big to Fail”: The Federal Government needs authority to unwind interconnected firms that pose a risk to the financial system during a crisis. However, implied government back-stops, pre-paid bailout funds and pre-emptive break-up authorities will increase risk and perpetuate moral hazard.
    
4. Corporate Governance: Federalizing state corporate law to benefit a few large union pension funds and activist investor’s smacks of pay-back rather than a sound regulatory response to the crisis. Bogging down management with annual shareholder fights and disenfranchising retail shareholders just isn’t the way to go.
    
5. Volcker Rule: Imposing the Volcker Rule will place the American financial services at a competitive disadvantage. Who says so? Our international competitors. There are other pro-growth tools such as capital and liquidity requirements to achieve the intent of the rule.

In 1860, Abraham Lincoln gave a speech at Cooper Union that propelled him to the Presidency. Lincoln’s speech was entitled "Right Makes Might". Clearly, President Obama is using today’s speech at Cooper Union to propel the financial regulatory reform bill to passage. Hopefully the title is "Getting It Right."