Five leading financial regulators and a Treasury Department official told lawmakers today that their agencies are working together to implement the sweeping financial-regulatory-reform law.
“The cooperation has been unlike anything I've seen in all my years in government,” Mary Schapiro, chairman of the Securities and Exchange Commission, told a hearing of the Senate Banking Committee. “I think there's a tremendous commitment to get to the right answers for the American people in every single thing we do.”
In addition to Ms. Schapiro, the heads of the Federal Reserve, the
Commodity Futures Trading Commission, the Federal Deposit Insurance Corp. and the acting comptroller of the currency testified.
“I don't see any deep conflicts or differences in point of view that are going to threaten implementation of this act,” said
Federal Reserve Chairman Ben Bernanke.
Ms. Schapiro's agency alone is responsibility for promulgating more than 100 rules and conducting 20 or so studies to help stand up the Dodd-Frank reform measure, which was signed into law in July.
The SEC and the CFTC are collaborating on rules affecting derivatives. Over the past two months, their respective staffs have met dozens of times and conducted several public forums. In the past, the agencies have developed a reputation for rivalry.
Intramural skirmishes would undermine the rollout of the financial reform law because Congress has put the outcome in the hands of the regulators. In many instances in its 848 pages of text, the Dodd-Frank law outlines congressional policy goals but leaves the details to the agencies.
“It was never my intention to have the Senate do the job of regulators; indeed, I don't think anyone wants the Senate writing detailed prescriptions that require technical, expert knowledge,” said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee. “Nor could we afford to tie regulators' hands with rigid legislative requirements that can't be adapted to changing circumstances.”
The highest-ranking Republican on the banking committee, Sen. Richard Shelby of Alabama, is wary of the power the measure gives to regulators.
“The bill has delegated to bureaucrats the authority to devise dozens of new rules for our financial system,” Mr. Shelby said. “The law itself provides no specific guidance in any number of areas, including derivatives, consumer protection and systemic risk.”
One of the new structures that Congress created in the bill, the Financial Stability Oversight Council, will include representatives of the agencies appearing before the Senate committee, as well as a couple others. The new body is charged with identifying systemic risk in the financial system.
Mr. Dodd urged each agency to make its participation on the council a priority. He said they would have to overcome any reflexes that might prevent information sharing.
“I can't legislate culture,” Mr. Dodd said.
The council, which is scheduled to meet for the first time tomorrow, might introduce a new element to the Washington regulatory culture by seeking input from beyond the
halls of the executive branch. David Massey, North Carolina deputy securities administrator and president of the North
American Securities Administrators Association Inc., is a non-voting member.
At NASAA's annual meeting in Baltimore earlier this week, Mr. Massey said that he would provide information to the council from an important front line of the financial world — the intersection of advisers and investors.
“A lot of times we see new trends just as they are developing,” he said.
