Saturday, April 23, 2011

Secretary Geithner Due to Respond This Week to Senator Hatch's Regulatory Arbitrage Concerns

Treasury Secretary Tim Geithner is due to respond by April 28 to the call of Senator Orrin Hatch (R-UT) for the delay of further implementation and rulemaking under the Dodd-Frank Act until the Senate is provided assurances that G-20 nations have agreed to adopt similar regulatory reforms. He is concerned that regulations implementing Dodd-Frank are being drafted without adequate consideration of the possibility that they will push financial activity to foreign financial institutions in jurisdictions that fail to adopt similar regulations. The Senator, who is the Ranking Member on the Finance Committee, specifically focused on regulations to implement the Volcker Rule and the implementation of the Consumer Financial Protection Bureau.

Senator Hatch posed a series of questions that he wants Treasury to answer by April 28. He wants to know whether any provisions of the Dodd-Frank Act are unlikely to become part of the international financial regulatory framework, and, if so, the reasons why. He also seeks details on any action the Administration has undertaken in furtherance of the International Policy Coordination section of the Dodd-Frank Act.

More broadly, the Senator wants information on whether the Administration believes that the failure of G-20 nations to adopt similar provisions to Dodd-Frank will place US financial institutions at a competitive disadvantage with their foreign competitors. In that vein, he asks if any formalized consultations have occurred with G-20 nations regarding implementation of provisions and principles included in the Dodd-Frank Act, specifically mentioning the Volcker Rule in that regard. The Senator asks for the dates by which the Administration believes the G-20 nations will formally adopt and implement provisions akin to the Volcker Rule.