Makovsky Survey: Corporate America Favors Financial Reforms

Main Street and Corporate America concur when it comes to financial reform. A Makovsky survey of 300 Fortune 1000 senior executives has revealed that only 28%, on average, believe the proposed finance reform legislation will have a negative impact on the U.S. economy. This very closely tracks the results of a recent Washington Post-ABC News poll, which found that only 31% of a random sample of U.S. adults oppose stricter federal regulations on the ways banks and other financial institutions conduct their business.

The Makovsky survey, conducted online by Harris Interactive in April 2010, found that senior executives generally support 6 of the 8 core proposals for regulatory reform. More specifically:

• 72% support regulating credit rating agencies
• 69% agree with proposals to close regulatory loopholes for derivatives and other complex investment packages
• 68% support the creation of a consumer protection agency
• 66% back the formation of a new regulatory agency to assess risk at financial institutions
• 66% agree with strengthening bank supervision
• 56% support the Volcker Rule

The reform that registered the greatest opposition, with 43% of executives opposing, was the right of the government and shareholders to influence senior executive compensation. The reform that had the least support, at 50%, was the Resolution Fund, a government process for shutting down large troubled firms viewed as “too big to fail.”

The latter two reforms, executives said, would also have the greatest negative impact on the U.S. economy. With the exception of these two reforms and the Volcker Rule, slightly less than half believe the proposed reforms will have a positive effect on the economy and almost an average of 20% believe it will have no effect at all. The “executive pay” reform, corporate leaders felt also would have the greatest negative impact on their particular corporation (40%) as well as them personally (34%).
Although banks have largely been resistant to the reforms, the tide may be turning. According to the Chicago Tribune, after President Barack Obama called on leading bankers to get behind a Democratic-led financial regulatory overhaul, the chief executive of JPMorgan Chase & Co. said he's 80 percent on board. … It's obvious we need to reform our financial system.
Asked if the reforms would make executives vote differently in the upcoming elections if they were passed, the data reflected overall uncertainty. An average of 30% felt it would make a difference, an average of 43% said it would not, and nearly one-quarter were unsure.