Verret's Double Header on the Hill
Professor J.W. Verret visited Capitol Hill twice within days to provide testimony before two Senate subcommittees.
Verret's first appearance was at an April 29 hearing of the Senate Banking Committee's Subcommittee on Economic Policy to discuss the role of private equity firms and U.S. manufacturing capacity, specifically the concept of "short-termism" in financial markets and creation of public policies that reward long-term economic growth.
In his testimony, Verret told the subcommittee that the federal securities laws themselves are one cause of short-termism. Another cause, he said, is political short-termism, which happens when large investors pressure companies to pursue a special interest above shareholder returns.
"Special interests will often use the term, long-term investing, as a cover to substitute political discipline for market discipline when business decisions conflict with their ability to advance their special interests," Verret said.
On May 4 Verret returned to the Hill, this time to address the Senate Judiciary Committee's Subcommittee on Crime & Drugs at a hearing entitled, "Wall Street Fraud and Fiduciary Duties: Can Jail Time Serve as an Adequate Deterrent for Willful Violations?"
"A criminal fiduciary duty standard for securities brokers would impose inordinate costs on the securities markets that would be passed through to investors while doing little to stop future financial crises," Verret told members of the subcommittee.
Verret is a Senior Scholar at the Mercatus Center and director of financial regulatory studies at the International Center for Law and Economics.