Studies about the lack of competitiveness of the U.S. capital markets were coming out well before the 2007-2008 financial crisis. In November 2006, a market-oriented blue-ribbon Committee on Capital Regulation led by R. Glenn Hubbard and John Thornton observed that America was losing its dominance of world securities markets and urged modest deregulation. Then in early 2007, a study commissioned by New York Senator Charles Schumer and New York City Mayor Michael Bloomberg surprisingly urged more of the same. And in March 2007, a panel commissioned by the U.S. Chamber of Commerce was the focus of a conference led by then Secretary of the Treasury Henry Paulson.
In the immediate post-World War II period, the U.S. was, literally, the only place to invest because the U.S. was the last capital market standing. So it is hardly surprising that from the end of World War II until sometime in the middle of 2002, America dominated the worlds’ capital markets surely and completely. The Sarbanes-Oxley Act, passed in the summer of 2002, was a body blow to the competitiveness of U.S. capital markets. Dodd-Frank’s passage possibly was the death knell. The passage of Dodd-Frank further undermines the competitiveness of U.S. capital markets.