Friday, June 27, 2008
Senators Caution Fed, SEC On Securities Oversight
Senators Chris Dodd (D-CT) and Richard Shelby (R-AL), Chairman and Ranking Member respectively of the Senate Banking Committee, sent a letter to the Fed, SEC and the Treasury cautioning them against rushing into inter-agency 'Memorandum of Understanding' to reform regulation of financial institutions on Wall Street.
In the letter, Dodd and Shelby recognize the agencies’ efforts to improve and streamline our regulatory structure, but at the same time advise that any formal agreement among the agencies must not interfere with Congressional efforts to examine the issue. Here's a copy of the letter. An excerpt from the letter says that "Given the limited authority of the Fed and the SEC to regulate investment banks with primary dealer status, and Congress’s ultimate responsibility for formulating financial regulatory policy, we ask that no action regarding implementation of the [Memorandum of Understanding] be taken before we can determine that it is in the best interests of our nation’s economy and the well being of its citizens."
Bloomberg report has a response to the letter from SEC Chairman Christopher Cox. Cox offered to brief Dodd and Shelby on the SEC's talks with the Fed. The memorandum doesn't "create new legal authorities or responsibilities,'' he said in a letter responding to the two. "It is intended to facilitate our agencies' ongoing, day-to-day cooperation. It is the role of Congress to decide whether, and if so how, to alter the existing regulatory structure.''
Pretty sure the Senate will soon come up with a hearing to 'debate' the lines of authority granted to the Fed and the SEC. Not that there's any legislation likely on the matter, but this letter is probably the result of some 'bipartisan' pressure by Wall Street on the Senators to stall the impending regulations.
The Senate Banking Committe last held a hearing (video) examining the regulation of investment banks by the SEC on the 5th of May, where Mr. Erik Sirri, Director of the SEC's Division of Market Regulation testified, along with former SEC Chairs Arthur Levitt and David Ruder. Another hearing to examine securities underwriting practices at investment banks on the 10th June has been postponed. No date has been given as yet for any future hearing on the matter.
In the letter, Dodd and Shelby recognize the agencies’ efforts to improve and streamline our regulatory structure, but at the same time advise that any formal agreement among the agencies must not interfere with Congressional efforts to examine the issue. Here's a copy of the letter. An excerpt from the letter says that "Given the limited authority of the Fed and the SEC to regulate investment banks with primary dealer status, and Congress’s ultimate responsibility for formulating financial regulatory policy, we ask that no action regarding implementation of the [Memorandum of Understanding] be taken before we can determine that it is in the best interests of our nation’s economy and the well being of its citizens."
Bloomberg report has a response to the letter from SEC Chairman Christopher Cox. Cox offered to brief Dodd and Shelby on the SEC's talks with the Fed. The memorandum doesn't "create new legal authorities or responsibilities,'' he said in a letter responding to the two. "It is intended to facilitate our agencies' ongoing, day-to-day cooperation. It is the role of Congress to decide whether, and if so how, to alter the existing regulatory structure.''
Pretty sure the Senate will soon come up with a hearing to 'debate' the lines of authority granted to the Fed and the SEC. Not that there's any legislation likely on the matter, but this letter is probably the result of some 'bipartisan' pressure by Wall Street on the Senators to stall the impending regulations.
The Senate Banking Committe last held a hearing (video) examining the regulation of investment banks by the SEC on the 5th of May, where Mr. Erik Sirri, Director of the SEC's Division of Market Regulation testified, along with former SEC Chairs Arthur Levitt and David Ruder. Another hearing to examine securities underwriting practices at investment banks on the 10th June has been postponed. No date has been given as yet for any future hearing on the matter.
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