By: Tom Donohue, President and CEO, U.S. Chamber of Commerce (Feb 17, 2010)

Today, many Americans look at our financial markets and wonder what happened. How did it all go wrong? And what is being done about it?

Getting a financial regulatory reform bill done this year is critical to our economic recovery and to get job growth back on track. Democrats and Republicans must work together to ensure that a bill is passed that will provide much-needed certainty and renewed confidence in our financial system--not the uncertainty generated by concerns about unintended consequences or shortsighted policies that will do more harm than good.

In the meantime, businesses across the country are suffering from decreased revenues, reduced access to credit, and rising costs. They, too, need the certainty of strong financial markets that can provide the capital to grow, invest, and create jobs. The American people need and want real bipartisan solutions, not Washington finger-pointing.

The White House and Congress have issued a flurry of proposals to improve our financial system--some are good and others aren't. The so-called Volcker Rule--which would reestablish some firewalls between commercial and investment banking--deserves serious consideration, but the devil is in the details. While unconscionably risky practices must be eliminated, reasonable risk taking and innovation must be allowed for the markets to operate appropriately. While the Volcker Rule attempts to limit systemic risk, it may be too rigid in its approach. Adequate capital standards may be more flexible and conducive to economic growth.

The Consumer Financial Protection Agency (CFPA), however, is the wrong remedy at the wrong time. Passed by the House, the CFPA would be a massive new bureaucracy whose broad and vague regulatory authority would create significant disincentives for banks to lend. It would also impose regulatory burdens on nonfinancial businesses--including tens of thousands of small businesses--throughout the economy, even those that have little to do with consumer finance. These businesses could fall subject to CFPA regulations simply because of the way they bill customers, or because they are vendors to financial firms that offer consumer products. The result would be a reduction in credit availability and affordability, as well as new costs on businesses when they can least afford it.

Few things are as necessary for the success of the American economy and job creation as healthy capital markets. That's why we must put aside partisan politics, seek common ground, and work cooperatively to fix what’s wrong with our current system while preserving what works. That's exactly what the U.S. Chamber and its Center for Capital Markets Competitiveness are trying to do.