CongressionalHearings/Dodd-Frank/CHRG-111hhrg54868/CHRG-111hhrg54868--96.txt We have made a systemic risk determination with the Treasury and the Federal Reserve Board to undertake a troubled asset relief program -- the PPIF or legacy loan program . CongressionalHearings/Dodd-Frank/CHRG-111hhrg53021/CHRG-111hhrg53021--20.txt Finally , our plan will help protect investors by taking steps to prevent OTC derivatives from being marketed inappropriately to unsophisticated parties . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--182.txt This is an issue that I am actively engaged in through my role as Chairman of the Financial Stability Board 's Working Group on Provisioning . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--2.txt We are going to hear about proposals to regulate the securities market so that it supports economic growth and protects investors rather than threatens economic stability . CongressionalHearings/Dodd-Frank/CHRG-111shrg55278/CHRG-111shrg55278--103.txt This provides a unique opportunity for the U.S. to be the leader in this area and provide a model for the effective resolution of failed entities . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--229.txt This would leave 8 financial regulators at the Federal level and 50 bank regulators , 50 insurance regulators and 50 securities regulators at the State level . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--229.txt b. How Our Regulatory Structure Fails : There are at least seven ways in which our current regulatory structure fails : Needless Burdens That Weaken Safety and Soundness Focus . CongressionalHearings/Dodd-Frank/CHRG-111shrg53176/CHRG-111shrg53176--147.txt However , Congress and the public have the benefit of hearing the different points of view from the Fed , the Treasury , the FDIC or the SEC , for example . CongressionalHearings/Dodd-Frank/CHRG-111shrg53176/CHRG-111shrg53176--147.txt SEC resources should no longer be devoted to arbitrating whether shareholders should be allowed to vote on resolutions germane to a company 's business . CongressionalHearings/Dodd-Frank/CHRG-111shrg53176/CHRG-111shrg53176--147.txt The SEC staff and I believed that this new standard would have undercut the stability and solvency of the major U.S. securities firms . CongressionalHearings/Dodd-Frank/CHRG-111shrg54589/CHRG-111shrg54589--137.txt Secretary Geithner recognized that multiple Federal regulatory agencies should play critical roles in implementing the proposed framework , including the SEC and the CFTC . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--123.txt Appearing before this Committee on September 23 , 2008 , Federal Reserve Chairman Ben Bernanke noted : The failure of Lehman posed risks . CongressionalHearings/Dodd-Frank/CHRG-111hhrg53246/CHRG-111hhrg53246--7.txt Our witnesses today , SEC Chairman Mary Schapiro and CFTC Chairman Gary Gensler , have an important task before them . CongressionalHearings/Dodd-Frank/CHRG-111hhrg53246/CHRG-111hhrg53246--7.txt When I helped to introduce the Derivative Safety and Soundness Supervision Act , we sought to enhance the supervision of derivatives activities of financial institutions . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--119.txt The key point is that exemptions like Rule 3a-7 give the SEC a tool that they could use even without Congressional legislation -- if the SEC was willing to take action . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--119.txt Although the SEC did ban short selling in financial stocks briefly in 2008 , one can still imagine an occasion on which the SRR and the SEC might disagree . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--14.txt Four , the Federal Reserve needs the authority to require the writedown of risky assets by financial institutions , regardless of whether accounting rules mandate it . CongressionalHearings/Dodd-Frank/CHRG-111shrg53822/CHRG-111shrg53822--88.txt The policy question facing Congress is whether it makes sense to extend FDIC bank resolution processes to other financial institutions . CongressionalHearings/Dodd-Frank/CHRG-111shrg53822/CHRG-111shrg53822--92.txt --------------------------------------------------------------------------- Preventing Institutions From Becoming Systemically Important Many current regulatory proposals focus on preventing institutions from becoming systemically important . CongressionalHearings/Dodd-Frank/CHRG-111shrg51290/CHRG-111shrg51290--60.txt Prudential regulation can identify practices that could harm consumers , and can ensure that a firm can continue to provide products and services to consumers . CongressionalHearings/Dodd-Frank/CHRG-111shrg53176/CHRG-111shrg53176--158.txt Hedge Funds as Financial Investors One of the most important roles that hedge funds play in our economy is that of investor . CongressionalHearings/Dodd-Frank/CHRG-111hhrg48867/CHRG-111hhrg48867--266.txt Every recipient , with the exception of AIG , of TARP money has in some respect been designated a healthy institution by the United States Government . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--267.txt --------------------------------------------------------------------------- Agency Funding , and Staffing : ICI consistently has called for adequate funding for the SEC in order to support its critical regulatory functions . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--267.txt Reforming the Responsibilities and Structure of the SEC : To bring a consistent policy focus to U.S. capital markets , ICI strongly recommends the creation of a new Capital Markets Regulator . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--93.txt As the supervisor of bank holding companies and financial holding companies , the Federal Reserve already supervises all large U.S. commercial and investment banking firms . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--93.txt In testimony on July 14 , SEC Chairman Mary Schapiro addressed strengthening SEC examination and oversight and improving investor protection . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--268.txt ICI offers the following thoughts with regard to organization and management of the Capital Markets Regulator : LEnsure high-level focus on agency management . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--33.txt Chairman Dodd , my colleagues and I support this Committee 's efforts to modernize our Nation 's financial regulatory system . CongressionalHearings/Dodd-Frank/CHRG-111shrg55278/CHRG-111shrg55278--120.txt During the crisis , many consolidated supervisors , including the SEC , saw large interconnected , supervised entities seek Government liquidity or direct assistance . CongressionalHearings/Dodd-Frank/CHRG-111hhrg54867/CHRG-111hhrg54867--11.txt Our proposal tries to achieve this balance by consolidating the fragmented , scattered authorities that are now spread across the Federal Government and State government . CongressionalHearings/Dodd-Frank/CHRG-111shrg55739/CHRG-111shrg55739--150.txt --------------------------------------------------------------------------- The Sarbanes-Oxley Act of 2002 included a provision that required the SEC to send a report to Congress on the credit rating industry and the NRSRO system . CongressionalHearings/Dodd-Frank/CHRG-111hhrg53245/CHRG-111hhrg53245--21.txt Point number two : A key aspect of the reform is establishing the Federal Reserve as a systemic risk regulator . CongressionalHearings/Dodd-Frank/CHRG-111shrg56262/CHRG-111shrg56262--93.txt Views on Securitization Policy and Market Reform Initiatives Numerous policy and market reforms aimed at the securitization market have been advanced in response to the broader financial market crisis . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--167.txt However , we must also acknowledge that many of the systemically significant entities that have needed federal assistance were already subject to extensive federal supervision . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--167.txt These standards must apply across all jurisdictions and issuers , otherwise gaps create competitive pressures to reduce standards , as we saw with mortgage lending standards . CongressionalHearings/Dodd-Frank/CHRG-111shrg55278/CHRG-111shrg55278--11.txt The systemic risk regulator should have access to information across the financial markets about institutions that pose significant risk . CongressionalHearings/Dodd-Frank/CHRG-111hhrg53242/CHRG-111hhrg53242--27.txt We stand ready to work with you , Mr. Chairman , and members of the committee as these issues are resolved through the legislative process . CongressionalHearings/Dodd-Frank/CHRG-111shrg55278/CHRG-111shrg55278--128.txt The difficulties likely to result from superimposing Federal Reserve supervisory and regulatory authority onto comprehensive SEC regulation of mutual fund advisers should not be underestimated.Q .3 . CongressionalHearings/Dodd-Frank/CHRG-111hhrg53248/CHRG-111hhrg53248--178.txt It would disrupt consumer protection oversight of banks and would fail to adequately address the current lack of nonbank supervision . CongressionalHearings/Dodd-Frank/CHRG-111shrg54589/CHRG-111shrg54589--130.txt By transferring credit risk , the bank can free up capital and make more loans at a time of contracting credit availability .