Speaking at a conference, SEC Commissioner Michael S. Piwowar’s opening remarks included “In preparing for this speech, I thought a lot about what moniker I could use to best describe the [Financial Oversight Stability Council, or] FSOC. The Firing Squad On Capitalism. The Vast Left Wing Conspiracy to Hinder Capital Formation. The Bully Pulpit of Failed Prudential Regulators. The Dodd-Frank Politburo. The Modern-Day Star Chamber. You get the point. There are countless terms I could use that are appropriately pejorative and at the same time entirely accurate. For the sake of clarity, I will stick with references to the two official nicknames of the FSOC – the “Council” or the “Unaccountable Capital Markets Death Panel.”
Raising more specific concerns, Mr. Piwowar noted:
- Through a “macroprudential” approach the Fed would expand its reach by immediately pulling under its regulatory umbrella any firms designated as “systemically important financial institutions.”
- The Fed, through the Council, has been ignoring the talent and skills of the hundreds of subject matter experts in each of the SEC’s rulemaking divisions – Investment Management, Corporation Finance, and Trading and Markets. The prudential regulators on the Council have been proceeding as if they themselves are the ones who know securities markets and investment products best.
- The SEC is not the only the Council member whose expert views are being dismissed. The Council’s “independent member with insurance expertise” voted against the designation of insurer Prudential Financial as a SIFI. One quote from his lengthy and sharply worded dissent most succinctly describes his position: “[t]he underlying analysis utilizes scenarios that are antithetical to a fundamental and seasoned understanding of the business of insurance, the insurance regulatory environment, and the state insurance company resolution and guaranty fund systems.”