The Future of Capital Formation

Hearing Date: May 10, 2011 12:00 am

Chairman Darrell Issa Hearing Preview Statement

Tuesday’s hearing of the House Committee on Oversight and Government Reform will provide lawmakers with an opportunity to better understand how securities regulations have harmed public and private capital formation in the United States. For many years, the U.S. has been recognized as having the largest, most liquid, and most competitive capital markets in the world. Yet for the last two decades, capital formation – which is integral to job creation and a robust economy – has been in decline.

Economists now estimate that the market for underwritten initial public offerings in the U.S. have plummeted from an annual average of 530 during the 1990s to about 126 since 2001. Meanwhile, the number of companies listed on the major American exchanges peaked in 1997 at more than 7,000. Today, there are approximately 4,000. Furthermore, private capital formation in the U.S. is increasingly difficult, as demonstrated by Facebook’s recent decision to issue its high-profile private offering to foreign investors but not Americans. Reversing this trend and efficiently attracting capital to the best investment opportunities in the United States is critical to a widespread economic recovery and the long-term viability of our global market position.

The Committee will hear testimony from SEC Chairman Mary Schapiro, in addition to private sector stakeholders and market analysts, about the effectiveness of securities regulations to simultaneously protect investors from fraud and facilitate capital formation. Specifically, the Committee will seek to expose the compounded expense to the U.S. economy that some SEC regulations pose to small businesses, start-ups, and other American job creators. Working together with regulators and stakeholders, the Committee hopes to foster a corrective course that ends the decline of U.S. markets and opens growth opportunities for American industries.

Witnesses and testimonies

Name Title Organization Panel Document
Hon. Mary Schapiro Chairman Securities and Exchange Commission Document
Ms. Meredith Cross Director, Division of Corporation Finance Securities and Exchange Commission
Richard Rahn, Ph.D. Cato Institute Document
Mr. Jonathan Macey Yale Law School Document
Mr. Barry Silbert CEO SecondMarket Document
Mr. Eric Koester Co-Founder Zaarly, Inc. Document
Hon. Roel C. Campos Former Commissioner Securities and Exchange Commission Document