In response to the Notice of Proposed Rulemaking, Restrictions on Proprietary Trading and Certain Interests in and Relationships with Hedge Funds and Private Equity, ITIF urges the Agencies to carefully consider the ramifications of their actions as they adopt final rules in this proceeding. Specifically, ITIF believes that the Agencies should implement the Volcker Rule so that it affects the two types of funds referred to explicitly by Congress - private equity funds and hedge funds and does not sweep in other activities that do not present the type of risk Congress sought to regulate. In particular, ITIF urges the Agencies not to apply the Volcker Rule to venture capital funds and investments.
Good Speech, Good Ideas, Yet More Needed…
In follow-up analysis of the State of the Union address, ITIF affirmed it praise for the President's focus on competitiveness but makes the case for more robust R&D, tax, trade and energy that should included in the President's upcoming budget proposal.
- It is important to maintain funding for applied R&D in addition to basic R&D to better ensure commercialization of good ideas. The revitalization of manufacturing requires serious investment in a manufacturing technology initiative.
- Better trade enforcement must be matched with identifying China as a currency manipulator and setting higher standards in new free trade agreements.
- Corporate tax reform must expand and retain tax incentives to bolster the competitiveness of traded sectors and not be tethered to revenue neutrality. Lower effective corporate taxes should be the goal.
- Technology's role in enhancing productivity and long-term growth is critical. Support for clean energy must include robust investment in the innovation that will lead to the breakthroughs we need.
Let the Ex-Im Bank Do its Job Supporting U.S. Exporters
Congress should expeditiously reauthorize the Export-Import Bank and increase its funding authority to at least $160 billion annually over the next reauthorization period. When the Bank’s previous authorization expired at the end of the last fiscal year on September 30, 2011, Congress temporarily extended the Banks’ authorization while capping its lending authority at $100 billion, an amount barely in excess of the $80 billion in credits the Bank had outstanding at the time. As a consequence, at current rates, the Bank is likely to reach its authorization cap by the end of the first quarter of 2012 and so would be unable to issue new financing assistance. This would be a disastrous outcome for not just U.S. exporters, but also for U.S. employment, and the health of the overall U.S. economy. However, even at this moment, foreign competitors are using the mere possibility that Ex-Im Bank financing may be difficult to secure in future months (not to mention lawsuits like ATA’s again the Ex-Im Bank) as a cudgel to strike fear into customers of U.S. exporters in an effort to turn their business to foreign suppliers.