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The video shows excerpts of the speech below:

(As prepared for delivery)

Remarks by Ambassador William E. Kennard to 8th Annual European Financial Services Conference

April 26, 2010
Brussels, Belgium

(Moderator: John Houston)

Thank you, John.
The title of this discussion is New Deal or Business as Usual. WellI do not agree with the premise of that title as I think that business as usual is not an option. The crisis of the last two years has clearly demonstrated serious shortcomings in the global financial system both in how it does its business and how it is regulated. The consequences of these shortcomings have been large: millions of jobs lost, trillions in lost savings, and thousands of failed businesses. Society is demanding that we address the flaws in the system that allowed this to happen. As President Obama said last week: We have to do everything we can to ensure that no crisis like this happens again. The Administration is working hard to enact reform in the U.S. that would hold financial firms more accountable, improve transparency in financial transactions, and provide consumers and stakeholders the information they need to make decisions. The bills passed by the House of Representatives and voted out of the Senate Banking Committee are a good foundation towards achieving these goals and we will be working very hard to get a strong reform enacted soon.

Just as it is not an option to go back to business as usual, it is not an option for the U.S. or EU to go it alone. The U.S. and EU make up over half of global GDP and the lions share of global capital markets. Our financial systems are highly intertwined. Our banks, investment managers, and insurance companies have extensive operations on both sides of the Atlantic. And, capital is more and more mobile. [In my former life in finance, I saw every day the depth and importance of the global capital markets that can create opportunities for providers and users of capital on opposite sides of the globe.]

In such a world, we cannot achieve alone what we want and need to achieve. Capital can move so easily from one jurisdiction to another. It is easy to lose the benefits we derive from open financial markets and financial innovation that rapidly cross borders if we ignore each other. Different national standards open the possibility for regulatory arbitrage and gaps in oversight, which can undermine the stability of the system with negative consequences for the real economy. To ensure that we meet our responsibilities and address the shortcomings we know exist, we have to act together.

However, the U.S. and EU are different and those differences can make it challenging to work together. Our financial systems have structural differences. We obviously have different political systems. And, as you know, the EUs political system is in the process of digesting a pretty fundamental change with the Lisbon Treaty. These differences have also been compounded by the natural tendency to look inward in times of crisis.

However, on a broad range of issues, we can only achieve effective solutions if we do so together. Thus, we need to figure out how to cooperate while respecting the differences we each bring to the table. On financial services regulation, we need to figure this out quickly.

Over the last 10 years, as weve grappled with, first, the challenges brought on by the rapid globalization of financial markets, and, second, the financial crisis, weve developed closer and closer mechanisms for cooperation. These include the Transatlantic Economic Council, the U.S. EU Financial Markets Regulatory Dialogue, and the elevation of the G-20 to the Leaders level. These mechanisms have helped us resolve potential problems before they arose and deal with tough issues when they have. With the crisis, these mechanisms have I sincerely believe helped us to avert an even worse outcome.

Thus, I believe that there is no option but to take decisive action to address the problems in our financial sectorand to do so together with the EU. We have a strong transatlantic partnershipin this and a range of areasthat gives us a base to do so.

So, if you will let me, Id like to reframe somewhat the question posed for discussion. Rather than will we or wont we reform, since we know we have to take action, how can we best do so together?

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(public domain)

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