Global experts dissect investment environment in wake of financial meltdown

Vancouver— A leading figure in the fight for financial regulation reform in the United States made his case for sweeping changes to an audience of pension funds managers, institutional investors and business academics at SFU’s Segal Graduate School of Business in downtown Vancouver yesterday.

Damon Silvers, the Deputy Chair of the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP), argued for broad U.S. legislative introductions in the wake of the global financial crisis that would restore confidence in investment markets. These include a new, independent consumer protection regulator; regulation of executive pay to discourage excessive risk-taking; the limiting of excessive leverage in financial institutions; and reformation of the country’s credit rating system.

He also called for making a global financial regulatory floor a U.S. diplomatic priority. Speaking to the mostly-Canadian audience in the room, he remarked that “you, more than (Americans), understand that capital markets are global.”

His presentation was part of a panel focused on the global financial crisis hosted by the CIBC Centre for Corporate Governance at SFU Business and the Shareholder Association for Research and Education. He was joined by Edward Waitzer, a professor in corporate governance from the Schulich School of Business and Osgoode Hall Law School.

Silvers, Director of Policy and Special Counsel for the AFL-CIO, was appointed jointly to his Congressional Oversight post by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid.

He also wants lawmakers to increase supervision of the so-called shadow banking system, which includes controversial financial entities such derivatives, hedge funds, private equity, and offshore tax havens.

“When capital markets become the equivalent of moving money under the mattress, or they are about gambling, the consequences for pension funds and for our society are very serious,” he said. “Capital markets and capital market institutions should be subject to comprehensive regulation aimed at ensuring transparent, fair markets and mitigating systematic risk.”

Silvers’ presentation was followed by Waitzer’s discussion on the changing landscape for pension plan trustees post-financial meltdown, and the challenges to reform in Canada and the U.S. Waitzer called for the pension fund community to lead the way in financial regulatory reform and refocusing corporate governance on risk.

Reflecting on how Canada can learn from its southern neighbour, he cited the speed of the U.S. government’s response to previous financial crises, and the country’s historic embrace of new ideas and free markets.

“One of the differences (between Canada and the U.S.) is the capacity of the U.S. culture to innovative,” he said. “A little bit of innovation can make up for a lot of other things.”

The event was moderated by Robert Adamson, Executive Director of the CIBC Centre for Corporate Governance and Risk Management at SFU Business.

The Centre pursues and sponsors research in three broad, yet highly interrelated areas of corporate governance and risk management, with the belief that good governance requires an enterprise-wide view of risk management. Identifying and disseminating best practices for corporate governance and risk management is at the core of the Centre’s mandate.