NASDAQ Chief Advocates Reform, Applauds Markets
January 9, 2009 | By Andrew Krei
The head of the NASDAQ stock market used his Jan. 8 Club luncheon platform to outline causes of the U.S. economic crisis last fall, and to urge regulatory reforms to provide trading markets with better information for investors.
Robert Greifeld, president and CEO since 2003 of the electronic stock market, said the breakdown''s root cause was "bad decision-making based on bad information….Throughout the economy, trillions of dollars in investment instruments were never subject to the rigor of trading on a transparent, well-regulated market."
"The time has come," he said, "for best practices and a comprehensive program of re-regulation that protects investors from risk." Among his proposed reforms were consolidating two major federal regulatory bodies because of overlapping oversight, the Depression-era U.S. Securities and Exchange Commission and the more recent Commodities Futures Trading Commission. Also, he said that company boards should compensate executives more on the basis of final results, and less on plans and models.
And he touted new tools for ensuring proper oversight of bailout measures, such as NASDAQ''s new Government Relief Index that tracks companies participating in government sponsored programs like the Troubled Assets Relief Program, which is the largest part of the $700 billion bailout plan.
"CEOs are not stupid, and not all are greedy," he said. "We saw that highly respected, household names in the banking world came to work in the morning and left every day without any idea of the true value of the assets that went on their books each day."
As a model for improvements, he cited NASDAQ''s creation in the 1970s to assist trading on the over-the-counter market. "The negative aspects of the OTC market can be changed."
"If we fix these markets we will create a better foundation for President-elect Obama''s long-anticipated and much-discussed trillion dollar stimulus package," he said. "We believe in the need to jump-start the economy, but we should not turn up the heat on an oven that is broken."