Mar 12 2003


“Thank you, I appreciate the opportunity to speak to you today.”

“I know that many of you would be very interested in hearing a definitive list of items that the Committee is going to consider this year. However, the unpredictable nature of things cautions me against providing such a list.”

“Instead, I will discuss some key principles which will serve as a guide as we move forward.”

“First, I take the Committee’s legislative and oversight responsibilities very seriously. We will be engaged on both fronts, across all issue areas, on an active and consistent basis.”

“Second, in focusing our efforts, I think it is important to pay particular attention to some key areas. For instance, improving efficiency and competition in our markets, which is as likely to involve eliminating unnecessary laws as it is adding new ones. Additionally, we must seek to promote the highest standards of conduct by improving transparency, accountability and by making sure there is consistent and aggressive enforcement of our laws. Ethics are not a part of our responsibilities, but we can and will try to eliminate fraud and manipulation.”

“Lastly, it is my intention that, whatever issue the Committee is considering, and we will not shirk our responsibilities nor shy away from any issue, we will proceed in a thorough and deliberate fashion. In other words, where action is necessary, we will act, but we will do so in a measured and responsible manner.”

“With that said, I also want to highlight the fact that I am appreciative of the larger context, the bigger picture if you will, in which the Committee is presently operating. In some regards, I believe this will affect the nature and timing of the issues we consider this year.”

“From my perspective, the prevailing climate today is one of uncertainty.”

“This is attributable to some pretty obvious considerations: the possibility of war, fear of terrorism, disparate indications regarding the direction of the economy and lingering concerns regarding the credibility of corporate America, among others.”

“In dealing with Iraq and terrorism, it is my hope that we are on the right track and that our ongoing efforts will ultimately lead to greater stability throughout the world. While this will not be easy, and the outcome is far from certain, I commend President Bush for engaging in an extremely important undertaking.”

“On the corporate accountability front, an area where we already know considerable harm was done to the marketplace and where tremendous uncertainty remains, it is my expectation that the Committee will remain very involved.”

“We have already moved the nomination of William Donaldson to be Chairman of the Securities and Exchange Commission. His speedy confirmation was crucial for providing leadership to the SEC during the critical phase of implementation of the Sarbanes-Oxley Act.”

“Moreover, an effective SEC is not simply a matter of top leadership, the Commission needs the appropriate resources and personnel to do its job. The new Accounting Oversight Board needs to be fully staffed, brought up to speed, and put into operation.”

“The Committee has an oversight responsibility in these areas. After passing major reform legislation like Sarbanes-Oxley, we can not merely walk away. In fact, after passing such a law, I think our work is just beginning. We must stay on top of things to make sure that work is getting done and getting done correctly.”

“Ultimately I look at it like this: although it is beyond our capability to eliminate risk from the marketplace, I believe it is very much our responsibility to reduce the likelihood or prevalence of fraud. We have recently enacted measures in an attempt to do this - continuing oversight is absolutely necessary to achieve this goal. The Committee will stay very active on this front and hopefully it will soon become clear that accuracy is again a basic standard in our markets.”

“Providing additional flexibility to the marketplace is another way to help during uncertain times.”

“We have a tremendously dynamic economy where change is a constant and driving force. Businesses need to be able to adapt to changing markets. There are instances, however, where laws and regulations impede this ability. The purpose of regulation is to establish fair markets that promote competition and innovation. Outdated laws do not serve such a purpose.”

“In the financial services sector, where there is an abundance of law and regulation, it is especially important to monitor the scope of regulation. It is my intention to work with the regulators and the financial services industry, to continuously review regulations to ensure that they function effectively. As I have in the past, I will introduce regulatory relief legislation as we we identify areas requiring reform or change.”

“My staff is also currently working with the Federal Reserve to develop legislation that would facilitate the use of substitute or truncated checks. Presently, banks must physically present and return original checks absent an agreement to do so by electronic means. Considering the state of electronic imaging technology, the fact that the law requires literally tons of checks to be trucked and flown back and forth across the country makes very little sense.”

“The legislation under consideration would end the requirement to move paper by allowing banks to transfer electronic images of checks rather than the originals. In cases where a hard copy of a check were needed, a legally equivalent substitute could be downloaded from the electronic image. The end result is considerable savings in time and money through the elimination of an outdated law.”

“Beyond traditional regulatory relief matters, there are also larger questions regarding the overall structure of the regulatory regime. From my perspective, it is just as likely for a particular law to become outdated as it is for a regulatory entity.”

“Reiterating and expanding on my earlier point, regulation AND regulators should protect fair markets so that such markets can produce and innovate. Our responsibility therefore, extends beyond reviewing the content of regulation. We must pay close attention to the structure of regulatory organizations to ensure they function effectively.”

“On other fronts, efforts we take today could help forestall uncertainty in the future.”

“The Federal Deposit Insurance System is one area in particular where I feel we could make changes that could prove to be very beneficial. The present system lacks flexibility and contains inefficiencies which could lead to more serious problems down the road. I have asked the Administration to work with the regulators, all of whom share the view regarding the need to address these deficiencies, to draft a bill. I believe a focused reform bill that excludes the unnecessary and risky proposals to increase coverage could be moved quickly.”

“Again, thank you for inviting me to speak today, I greatly appreciate the opportunity. I am looking forward to working with you in the future.”