Representatives of the hedge fund industry, the major financial institutions, and the insurance industry testifying before the House Financial Services Capital Markets Subcommittee agreed on Thursday, Mar. 5 that Congress should appoint a regulator to monitor systemic risk in the financial markets. The heads of the Managed Funds Association (the "MFA"), the Financial Services Roundtable, the Securities Industry and Financial Markets Industry Association ("SIFMA"), and insurance company Amica Mutual Group (as representative of the Property Casualty Insurers Association of America) all favored the creation of a central body to oversee and maintain financial stability.  

The parties disagreed over whom should take on the role of systemic risk overseer. While some participants favored giving the function to the Federal Reserve Board, others questioned its track record and whether it would then have "too much power." The MFA and SIFMA did not make specific recommendations on the subject.  

Richard Baker, president and CEO of the MFA, agreed that a central systemic risk regulator must be given broad authority and flexibility, and that no predetermined limits on what information it could seek should be set. However, Baker cautioned that disclosures must remain confidential.  

Meanwhile, the Investment Company Institute (the "ICI"), the mutual fund trade group, issued a regulatory reform proposal on Tuesday, Mar. 3 which called for the creation of two new regulators: one to oversee systemic risk and one to regulate the capital markets, market participants and financial investment products. The capital markets regulator proposed by ICI would take over the roles currently held by the SEC and the CFTC.  

House Financial Services Committee Chairman Barney Frank indicated during the Mar. 5 hearing that a merger of the SEC and the CFTC was "at this point" off the agenda.