Markets In Action

America’s market system is resilient

It’s been 10 years since the 2008 financial crisis, an event that set off a historic recession. In the decade since, the U.S. markets have recovered, hiring and job creation has bounced back, and the economy has shown steady growth after several years of subpar performance.

Those hard-earned achievements are attributable in large part to the swift response from policymakers from both parties and steadfast leadership from the Federal Reserve, along with financial industry leaders who stepped forward to urge changes to the existing system. But perhaps more importantly, they stem from the essential strength and resilience of the financial system. The challenge now is to ensure that those positive trends continue.

Reflecting on the anniversary of the 2008 crisis, SIFMA CEO and President Kenneth E. Bentsen Jr. writes in USA Today that today’s financial system is stronger and more resilient thanks to a number of actions taken by industry leaders and policymakers to protect markets and investors:

The development and growth of our capital markets has been bolstered by a robust regulatory framework put in place 85 years ago and continually updated, focused on investor protection, transparency, safety and soundness. 

The response to the financial crisis was no exception. An unprecedented number of new regulations were adopted, affecting everything from market structure to capital standards. While policymakers have rightly questioned whether some rules overshot the mark at the expense of growth, there’s no question our system is both more regulated and capitalized.

Bentsen points to post-crisis regulations, like higher capital requirements for U.S. banks and new rules on derivative transactions, as key developments that have helped to protect investors and taxpayers while reducing systemic risks in the markets. He concludes:

No other country’s markets come close to the depth and efficiency of ours, as evidenced by the size of our gross domestic product, the strength of our commercial sector, our levels of homeownership, and our vast national infrastructure. A key reason is the long-term strength of our markets and financial system.

Check out the full text of Bentsen’s argument for a reminder of how much progress has been made since 2008. But there’s still more progress to be made by embracing policies to boost capital formation for small- and mid-sized businesses, and to ensure a balanced regulatory system that promotes smoothly functioning markets while protecting investors.

To learn more about SIFMA’s recommendations for achieving those desirable goals, check out the following Project Invested articles that delve deeper into the issues at hand:

The challenge of balancing financial system regulation and economic growth

It’s time to encourage more companies to go public

Emerging growth companies…and why we need more of them

Understanding housing finance reform: A primer

The JOBS Act: Five years later