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The financial services industry directly impacts America's ability to achieve its national security goals. It is the life blood of the economy. The financial services industry's infrastructure is as designated critical by Presidential Directive -- it accounts directly for 9 percent of the Gross Domestic Product. More importantly, it supports virtually the entire economy by providing capital and liquidity for investment and operations. The financial services portion of the U.S. industrial base is generally strong. U.S. companies in this sector have transformed their business strategies to improve competitive advantages. The U.S. Government also must change by streamlining regulations and organizations to help assure continued success relative to global competition and to minimize the potential for the profit motive to result in morally hazardous behavior. A positive finding of this study is that significant security upgrades were implemented in the aftermath of 9/11. Concrete steps also must be taken to reform government-sponsored enterprises that have become too big to fail. Finally, there is a need to improve Defense Department financial policies and procedures. A better understanding of the behavior of capital markets by lawmakers, policy makers, and planners/programmers would result in more effective and efficient use of taxpayer dollars in funding defense procurement and operations. The cost of capital dynamics that impact our suppliers are, to a great extent, under appreciated by government officials.