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The role of financial services in the economy and its importance to our still-fragile economic recovery

At the National Capital Area Council of the Boy Scouts of America Financial Services “Good Scout” Award dinner on February 8th, Forum President & CEO Rob Nichols was honored for his contributions in public policy and as a leader in the financial sector. Paul Stevens, president and CEO of the Investment Company Institute, chaired the dinner, which raised money for the 56,000 young adults in the D.C. area who participate in scouting.  Below is an excerpt from his acceptance speech:

The role of financial services in the economy and its importance to our still-fragile economic recovery
 
Our economy and the American people have certainly had a rough few years.  Despite last Friday’s somewhat encouraging jobs number, too many Americans remain without work and numerous headwinds – both domestic and international – threaten to impede growth. Still, there is a sense that America is slowly repairing from this extraordinary economic and financial crisis.

 For that to occur, several things need to happen to put us on the path of economic recovery.  We need less partisanship and more avenues through which policymakers of both parties can work together.  We need to increase our exports. We need a tax code that doesn’t look like it was created by a bunch of monkeys with typewriters. We need a workforce with enhanced science and technology and engineering skills. We need a world-class education system. We need to reward and incent innovation.

And last, but certainly not least, we need an efficient, innovative, and well functioning financial sector. The frustration many people have with the industry is well understood.  There were certainly many mistakes on the part of some with regard to risk management and internal controls. But much as been accomplished over the last few years – even before the passage of Dodd-Frank – to make our system safer and more stable:

              • Bad actors are gone in the way of poorly managed institutions; 
  
              • Fannie Mae and Freddie Mac are in conservatorship;
 
              • Money market funds, derivatives and financial accounting are all much

                more transparent; 
  
              • Banks have significantly deleveraged and are much better capitalized;
 
              • Bank balance sheets are much more solid;
 
              • The boards and risk committees at financial institutions are tougher and more engaged; 
  
             • Mortgage underwriting has re-adopted standards common 30 years

              ago; and,
 
             • The banking industry has passed two stress tests, one by the Federal

               Reserve, the other by the Treasury Department.
 
Now is the time to allow the financial sector to fulfill its critical role as an intermediary between American savers and Americans who start business, grow those businesses and create jobs.  One thing is certain — talking down or otherwise undermining this essential industry won’t help create a job or provide economic security for American families facing hardship.

In short, lessons have been learned and now it is time to reengage with the economy, not rehash endlessly what happened and how. It’s time to get back to work – for all of us -- and to create jobs and growth-- in every sector of the economy.

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The Financial Services Forum is a non-partisan financial and economic policy organization comprising the CEOs of 18 of the largest and most diversified financial services institutions doing business in the United States.

The purpose of the Forum is to pursue policies that encourage savings and investment, promote an open and competitive global marketplace, and ensure the opportunity of people everywhere to participate fully and productively in the 21st-century global economy.

Welcome to ForumBlog. This is where our policy team analyzes the latest proposals, ideas, and news surrounding financial sector regulatory reform, trade, and the economy. Our goal is to provide thoughtful insights on the issues impacting the intersection of Wall Street and Washington, as we pursue policies that encourage savings and investment, promote an open and competitive global marketplace, and ensure the opportunity of people everywhere to participate fully and productively in the 21st-century global economy.