I would like to thank you, Mr. Chairman, for holding this very important hearing and I would like to thank our witnesses for testifying today.
As we all know, there has been a great deal of uncertainty in our equity markets. The retail investor has been especially hurt by the actions of a few, greedy criminals. Some of these criminals were on Wall Street, some in Houston, some in Mississippi and others all over the country. We have had problems, on a much smaller scale, in Kentucky as well. Greedy, sweetheart deals have fleeced billions and our economy has not recovered from the damage.
We desperately need to restore investor confidence. Over half the households in the country own stock. But the average investor is sitting on his money. They are keeping it in savings accounts, buying safe government bonds and I would guess some are even hiding their cash in their mattresses. It is fine that Americans are putting their money in safe investments such as IRAs, CDs and T-bills. I would, however, caution against mattresses. It is a good that many have diversified their investments. But we need to get people investing in the equity markets again. To achieve that, investors must once again believe in the equity markets. I believe this global settlement, along with the passage of Sarbanes-Oxley and the aggressive prosecution of corporate criminals is another step in achieving that confidence.
I am deeply worried about this economy. We have some growth but no new jobs are being created. We need to increase investment. Increasing investment creates capital. Capital creates jobs. This is also why we must pass a real stimulus package. We must create jobs immediately.
As my colleagues on the Committee know, I worked in the securities industry for over 25 years. I can assure you there were no Chinese walls, fire walls, stonewalls, Berlin Walls or any other kind of walls when I worked in the industry. Maybe a junior associate had a copy of Pink Floyd's The Wall, but that would be as close as we came. If someone was doing an IPO, everyone in the firm was aware of it. It is my hope that this settlement will construct real walls that keep different divisions of businesses separate. The investment bank division cannot influence the analyst division.
I hope this independent research fund will be truly independent. It is crucial for investor confidence. Investors must know they are getting sound advice and not just being told to buy in order to inflate the price of a stock that another side of the firm is pushing. Confidence must be restored. If investors don't have that confidence, they will not come back.
I think we need this oversight hearing to see if this agreement will work. If it doesn't, we can always come back and revisit it. But I think, right now, the markets need to be able to sort this agreement out and implement it. We need to see if it works. If it doesn't there will be ample time to fix it.
We all know that firms have paid out some large penalties. I am sure some will argue too much, I am sure some would argue not enough. But the firms who have been guilty have been hurt much more by investors pulling out. The markets are punishing them, that is why they have agreed to take these steps. They, more than anyone, know that confidence must be restored.
Once again Mr. Chairman, thank you for holding this important oversight hearing.