The U.S. economy faced major challenges in recent years from a global pandemic, record inflation, and a slew of new financial regulations from the Federal Reserve Board, Consumer Financial Protection Bureau (CFPB), and Securities and Exchange Commission (SEC).
To gain insight on how these developments impact businesses of all sizes, the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC), in collaboration with Teneo Research, surveyed 300 treasurers from companies of all sizes.
- Why survey treasurers? The role of treasurer includes those who manage everything from a business's cash flow to investments. Depending on the company, this consists of those with the role of CFO, Treasurer, or CEO. These professionals play a vital role in businesses of all sizes and their perspectives on how financial regulations influence real-world operations, offering guidance to policymakers and businesses.
Top findings
While optimism exists, concerns over macroeconomic risks, particularly taxes, inflation, and interest rates, persist.
- Over one-third of businesses are raising costs due to imposed financial regulations, causing operational constraints that impact their ability to provide services and invest.
- Proposed changes, especially those related to Basel III, potentially exacerbating the impact on business operations.
- A new stock buyback tax is a major concern for publicly traded companies and nearly two-thirds believe it will disrupt their ability to manage finances.
-
55%
of respondents believe the SEC’s 2022 Open-End Fund Liquidity Risk Management proposal could increase their costs if loan funds are deemed illiquid.
-
68%
of respondents believe that proposed net increases in capital requirements under Basel III would be damaging to their business.
Impact of financial regulations, including Basel III
The survey uncovered that changes in financial regulations, including Basel III, have had a significant impact on companies' financial management, prompting certain undesirable actions. Key findings include:
- 87% of U.S. businesses reported negative effects from regulatory-related cost increases
- 40% have reduced certain types of services to customers in response to financial regulations.
- 55% of respondents believe the SEC’s 2022 Open-End Fund Liquidity Risk Management proposal could increase their costs if loan funds are deemed illiquid.
- 54% of respondents believe their ability to raise capital will be harmed if the SEC does not extend no-action relief to 144A securities under Rule 15c2-11.
- 68% of respondents believe that proposed net increases in capital requirements under Basel III would be damaging to their business.
Economic outlook and risks
While an overall optimistic outlook prevails for both individual companies and the broader economy over the next 12 months—it's important to acknowledge some caveats. Key findings include:
- A generally positive sentiment, with 79% expecting their company's economic performance to somewhat improve.
- However, 73% anticipate an overall economic improvement, and there are concerns about looming macroeconomic risks.
- Corporate treasurers identified taxes, inflation, interest rates, and concerns over trade policy and tariffs as the top four current macroeconomic risks.
Financing business operations
The survey also explores how U.S. businesses finance their operations, relying on diverse financial institutions depending on size, industry, and location. Many businesses use multiple institutions for various services:
- 37% use at least four institutions for cash management.
- 36% employ four or more for payment services.
- 32% utilize at least four for issuing commercial paper and debt.
Conclusion
Over one-third of businesses report upping their costs due to financial regulations, suggesting these policies may contribute to greater inflation—among the top economic risks identified by companies in the survey.
