Paulson vows to keep US on top in global finance
Some executives say regulations need to be eased
WASHINGTON -- Treasury Secretary Henry Paulson, seeking a consensus among financial luminaries, pledged swift action to ensure the United States remains the world's dominant capital market.
"This is a high priority for me," Paulson said at a conference he convened in Washington yesterday. "There will be things we at Treasury, working with the regulatory agencies, will do in the near term and some other actions over the longer time frame to address these challenges to our competitiveness."
Paulson didn't specify what he might do, and there was little consensus on a course of action among his guests, who included Warren Buffett, the billionaire head of Berkshire Hathaway Inc., former Federal Reserve chairmen Alan Greenspan and Paul Volcker, and Jeffrey Immelt, chief executive of General Electric Co.
Robert Rubin, chairman of Citigroup Inc.'s executive committee and a former Treasury secretary, described the US regulatory and legal systems as "harsh and punitive," while Ann Yerger, who represents pension funds worth $3 trillion, said tougher rules benefit investors.
"We can't forget where we were five years ago," Yerger, executive director of the Washington-based Council of Institutional Investors, said of accounting scandals such as the one that engulfed Enron Corp.
The Treasury's Conference on US Capital Markets Competitiveness follows three studies since November that concluded issues ranging from Sarbanes-Oxley to litigation costs are causing investors to spurn Wall Street in favor of London and Hong Kong.
A study by New York consulting firm McKinsey & Co. concluded that the US would lose its place as the leading global financial center in the next decade without legal and regulatory changes. The study was commissioned by New York Mayor Michael Bloomberg and Senator Charles Schumer, a New York Democrat.
Bloomberg, who participated in the conference, is the founder and majority owner of Bloomberg LP, the parent of Bloomberg News.
Wall Street accounted for just two of the world's 25 largest public offerings last year, showing "there is something going on here that we need to be concerned about," said NYSE Group Inc. chief executive John Thain.
Arthur Levitt, a former chairman of the Securities and Exchange Commission, said New York financial firms make money no matter where companies choose to list their shares.
"I just don't think Western civilization is going to be much impacted by whether a company lists on the New York Stock Exchange or the Hong Kong Stock Exchange," Levitt said. 