Bernanke Sees Regulatory Harmony Ahead of FSOC Meeting

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter, Sept. 30, 2010.

On the eve of the first meeting of the Financial Stability Oversight Council (FSOC), Federal Reserve Board Chairman Ben Bernanke said he does not see “any deep or principled controversies” amongst regulators at this point.

Bernanke, appearing before the Senate Banking Committee Sept. 30, 2010, acknowledged that there will be pressure on regulators arising from the fact that there is “so much to do so quickly.” However, he said he does not anticipate conflicts that would threaten the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

FSOC, which is charged with providing comprehensive oversight of the nation’s financial system, will convene its first meeting on Oct. 1, 2010. The meeting will be chaired by Treasury Secretary Tim Geithner. 

 Senate Banking Committee Chairman Chris Dodd, D-Conn., urged the Council to act as “a collective gathering of equal partners,” where neither the Fed nor Treasury play a dominant role.

Treasury Deputy Secretary Neal Wolin said he does not see any “clear fault lines” between regulators at this stage, although he acknowledged that the situation could change moving forward.

Federal Deposit Insurance Corporation Chairman Sheila Bair said she anticipates collaboration and respect for individual spheres of expertise. “I think if we all start trying to rewrite each other’s rules, though, this council will become an impediment, not a way to facilitate reform,” Bair noted. She added that in “just about all the major areas” regulators bring different perspectives to the table, yet none of these would rise to the level of needing a legislative fix.

 

Meanwhile, Securities and Exchange Commission (SEC) Chairman Mary Schapiro noted that regulators have had “lots of vigorous debate behind the scenes.” She described the atmosphere as one of “healthy tension” within a spirit of collaboration.

Meanwhile, Securities and Exchange Commission (SEC) Chairman Mary Schapiro noted that regulators have had “lots of vigorous debate behind the scenes.” She described the atmosphere as one of “healthy tension” within a spirit of collaboration.

Wolin said in prepared testimony that in advance of FSOC’s first meeting, senior officials from each regulatory agency have been looking at how best to set up FSOC’s governance structure. Bylaws have been drafted, he said, and will be considered at the meeting. In addition to adopting organizational documents, Wolin said he expects the meeting to consider a resolution seeking public comment on the criteria for designating nonbank financial companies for heightened supervision. The Council will also consider a resolution seeking public comment on the Volcker Rule.