Six senior regulators of US agencies appeared before the US Senate Committee on Banking, Housing, and Urban Affairs to provide their insights on the resiliency of the US financial system since the enactment of the Dodd-Frank Act.
The regulators included Mary Jo White, Chair of the Securities and Exchange Commission, Timothy Massad, Chairman of the Commodity Futures Trading Commission and Daniel Tarullo, Governor from the Board of Governors of the Federal Reserve System, among others. This was Mr. Massad’s first public appearance since becoming head of the CFTC where his presentation was included on the CFTC’s website.
In his presentation, Mr. Massad mostly discussed the CFTC’s agenda going forward. Among other things, he indicated that he anticipates some unspecified “adjustments and changes” being made to previously adopted regulations, but that no “wholesale changes are needed.”
Mr. Massad indicated that, in connection with some proposed rules—related to margin for uncleared swaps and position limits—the CFTC will endeavor to “make sure that commercial businesses like farmers, ranchers, manufacturers, and other companies can continue to use these markets effectively.”
The new CFTC chairman also stressed the need for the CFTC to work with other international regulators “to build a strong global regulatory framework,” but stressed his appreciation for the challenges of this objective. This is because, according to Mr. Massad, “regulation occurs through individual jurisdictions, each informed by its own legal traditions and regulatory philosophies.” He gave no insight, however, into continuing discussions with European regulators over the recognition of US clearinghouses as so-called “Qualified CCPs,” which is necessary to avoid extra costs for European banks clearing transactions through them as of December 15.
Finally, Mr. Massad stated uncategorically that the “CFTC does not have the resources to fulfill” all the responsibilities it had prior to, let alone subsequent to, the adoption of Dodd-Frank. He indicated that he will work with Congress to address the agency’s finances.
In her testimony, Ms. White indicated that the SEC has focused principally on eight areas dealt with in Dodd-Frank since she became chair, including asset-backed securities, regulation of private fund advisors, proprietary activities of financial entities and over-the-counter derivatives. She cited newly adopted rules related to money market funds, the Volker rule related to proprietary activities, and the fact that “approximately 90%” of all rules mandated by Dodd-Frank are now proposed or finalized as among the SEC’s most significant accomplishments. These rules, she claimed, address issues that “were highlighted as a systemic vulnerability in the financial crisis.”
As Mr. Massad did, Ms. White also argued that, without additional resources, “the agency will be unable to fully build out its technology and hire the industry experts and other staff needed to oversee and police our areas of responsibility, especially in light of the expanding size and complexity of our overall regulatory space.”