Opening Statement for Hearing on
The Impact of Financial Regulatory Restructuring on Small Business and Community Lenders
Sam Graves
Ranking Member
Committee on Small Business
United States House of Representatives
Washington, DC 
September 23, 2009

I would like to thank the Chairwoman for holding this important hearing on the debate that will occur about restructuring regulatory oversight of America’s financial sector.  Given the fact that the financial services sector contributed more than a third of corporate profits in the country during the last decade, it is a significant debate.   

No one can question that the events affecting Wall Street last year had consequences on the overall American economy.  Once credit becomes unavailable, the modern economy comes to a grinding halt.  Consumers and businesses do not buy, manufacturers do not sell, and unemployment skyrockets.  Any reform to the financial regulatory process must meet two key objectives.  First, it must provide for an efficient operation of the financial markets.  Second, small businesses, the prime generator of new jobs in the economy, must have access to capital.  

Competitive markets need full information to operate properly.  To the extent that regulatory reform improves the information available to all parties that use the financial markets it will be beneficial.  That benefit must be weighed against the cost of providing information.

Much of the focus on financial regulatory reform proposals addresses either protecting consumers or preventing one or a group of institutions that create systemic risk leading to a collapse of capital and credit markets.  However, little has been said on the impact that such regulatory oversight might have on the access to capital for small businesses.  If the regulatory reform inhibits the ability of small businesses to obtain credit or access needed capital the regulation will have an adverse long-term consequence on the ability of the economy to grow.  

A famous philosopher once said “that those who cannot remember the past are condemned to repeat it.”  Whatever the outcome of the debate on restructuring the regulation of the financial sector, we cannot repeat the mistakes of the past.  Given the fact that financial panics have periodically occurred in this country going back to 1837, achieving a regulatory restructuring that ensures Congress does not repeat the mistakes of the past will be one of our most difficult tasks.    
 Again, I would like to thank the Chairwoman for holding this important hearing and yield back the balance of my time.