In a statement before the Senate Committee on Banking, Housing and Urban Affairs yesterday, FDIC chair Sheila C. Bair made her parting case for funding the regulatory agencies that are tasked with implementing Dodd-Frank, and the law itself.
Dodd-Frank will see its first anniversary later this month, and a significant portion of the rules that it stated must be finalized by that time are unlikely to be done. Bair acknowledged this as in part a budgetary issue, saying that “[w]hile the SEC and the CFTC have been given important responsibilities, they have not been given the resources needed to discharge them.” This reflects previous calls from both the SEC and CFTC for budgetary increases to support a heavier workload for analyzing markets, as well as crafting and enforcing new rules.
In her last statement as chair of the FDIC, Bair touched on a wide array of reform topics such as derivatives, global capital requirements, the housing market, and the role of banks in the economy’s future. She called for, among other things, a return to financial institutions as primarily lenders, heavier oversight on OTC derivatives, and stricter capital requirements. Additionally, she voiced support for the FDIC to complete rules next week regarding what some have termed as corporate “living wills”, or a Systemically Important Financial Institution’s requirement to formulate and file a plan with regulators for their own orderly liquidation in the event of a collapse.
With regard to the law as a whole, Bair called the Committee’s initial approval of the reform package “an important step forward in making our financial system stronger and more stable over the long-term.” A caveat then followed as she then restated the budgetary needs that have yet to be met, saying “without proper funding and, where needed, the confirmation of qualified leadership, the result could be needless uncertainty about the regulatory environment and failure to instill confidence in our financial markets and institutions.”
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