A report commissioned by New York Senator Charles Schumer and New York City Mayor Michael Bloomberg concludes that over-regulation is harming American competitiveness, with New York City being disproportionately impacted.
The most intriguing proposal in the report is the call for an optional federal charter for insurance companies. These companies currently are chartered by states, and state politicians abuse this process with mandates and other forms of regulation. An optional federal charter (similar to what exists in the banking sector) would force competition among regulators and create incentives for a more sensible system. That’s the good news.
The bad news is that the report also expresses sympathy for global regulations, which almost surely would mean politicians and bureaucrats insisting that all nations accept excessive regulation. Indeed, the International Organization of Securities Commissions (IOSCO) already is trying to impose a one-size-fits-all system on the world – an approach that would penalize jurisdictions with dynamic financial service industries, such as Hong Kong, Bermuda, and Cayman Islands (see here and here for more information). Tax-news.com reports on the new study:
United States Senator Charles E. Schumer and New York City Mayor Michael R. Bloomberg have released a report which warns that New York could lose its status as a global financial market within a decade without a major shift in public policy. Schumer, a New York Democrat, and Bloomberg, together with New York Governor Eliot Spitzer, warned that New York’s financial markets, stifled by stringent regulations, and high litigation risks, are in danger of losing businesses and high-skilled workers to overseas competitors, relegating New York to regional market status and adversely impacting the US economy. …Senator Schumer and Mayor Bloomberg commissioned the joint report, “Sustaining New York’s and the US’s Global Financial Services Leadership,” which sets out a series of recommendations to counter emerging threats to the United States’ position as the world’s financial leader, with a two-tiered package of national and local measures aimed at removing impediments to financial services competitiveness both domestically and internationally. The report warned that the United States would miss out on between $15 billion and $30 billion in financial services revenues annually by 2011 if the current situation goes unchanged. According to the joint report, while many of the causes are due to improved markets abroad and sophisticated technology that has virtually eliminated barriers to the flow of capital, a significant number of the causes for America’s declining competitiveness are self-imposed. …The report also noted that a complex and sometimes unresponsive regulatory framework has not only prompted many foreign firms to stay out of the US markets, but also is forcing more business overseas because of the complexity and cost of doing business in US financial markets regardless of where they are located.