Bachus: Regulators So
Busy Writing 400+ Dodd-Frank Rules They're Failing to Fulfill Their
August 1, 2012
Financial Services Committee Chairman Spencer Bachus submitted the
following statement for the record at a hearing on the Financial
Stability Oversight Council's annual report. Treasury Secretary Timothy
Geithner appeared before the Committee to deliver FSOC's report.
"When financial reform was debated by Congress two years ago,
Republicans suggested an alternative that would have consolidated the
number of regulators. Instead, the Dodd-Frank Act passed by Congress
eliminated one regulator, kept the others, added three more, and put
them on the Financial Stability Oversight Council.
"We were told this 'super committee' of regulators was needed to act as
an early warning system that would perceive threats far off in the
distance and take action before these threats could metastasize into
crises that bring down our economy.
"But two years after Dodd-Frank became law, there is little to no
evidence the Council has followed through in any meaningful way to live
up to these promises.
"Indeed, some of the most ardent supporters of Dodd-Frank are among the
Council’s harshest critics. Sheila Bair, the former FDIC chairman who
served as a member of the Council, told the New York Times recently the
'F.S.O.C. is M.I.A.'
"Others have chided the Council for failing to live up to its most basic
promises of accountability and transparency.
"Let me read from an article in the National Journal published on April
3rd of this year:
"The Financial Stability Oversight Council likes to boast about its
transparency but it 'makes the Kremlin’s Politburo at the height of the
Soviet Union look open and democratic,' says Dennis Kelleher, president
and CEO of Better Markets…Case in point: this week’s meeting – the
council’s first in six months – to approve guidelines for identifying
firms that could pose a risk to the financial system. The council
approved the guidelines unanimously without debate and didn’t disclose
what had changed from the draft stage [of the guidelines].
"In the regulators’ defense, perhaps these meetings are perfunctory
because members of the Council simply don’t have the time for them.
After all, they must rush back to their offices to write the hundreds of
new rules required by Dodd-Frank.
appear to be so preoccupied writing these new rules that they’re missing
the basics – like safeguarding segregated customer funds and protecting
investors from Ponzi schemes and other financial frauds. In just the
past few months, we’ve seen regulators fail to protect the customers of
MF Global and Peregrine Financial Group. Now there are questions about
why regulators didn’t take concrete action to stop LIBOR manipulation.
"It seems regulators are so busy trying to write rules against things
like proprietary trading – which even Chairman Volcker agrees was not a
cause of the financial crisis – that they are failing to fulfill their
primary mission. Are they so busy writing tickets for jay walking that
they’re letting the robbers and thieves run loose?
"Rather than pass massive new laws that require hundreds of new
regulations, it’s a better use of limited resources to make sure
regulators are enforcing the rules we already have. Clear rules and
better enforcement of them will do more to protect consumers, investors
and the financial system than a 'super committee' of regulators."