Sunday, May 12, 2013

House FSC Chairman Emeritus Bachus Fears Regulatory Arbitrage with Financial Reform Regulations

Chairman Emeritus of the House Financial Services Spencer Bachus (R-AL) is very concerned with regulatory arbitrage in the implementation of financial services legislation globally, which is to say that he is concerned that the SEC and CFTC regulations implementing the Dodd-Frank Act will not be equivalent with regulations implementing various pieces of E.U. financial reform regulation, which ultimately is to say he fears that U.s. financial firms may be globally disadvantaged.

Make no mistake, the title of Chairman Emeritus is not just an honarary one. Rep. Bachus is a full voting member of the Committee and serves on two of its most important subcommittees. He attends hearings and questions witnesses before the Committee. Those questions have increasingly focused on the need for regulators to harmonize financial regulations both domestically and globally. At a recent hearing, he expressed frustration with the ability of the Financial Stability Oversight Council to coordinate SEC and CFTC regulations implementing the derivatives provisions of Dodd-Frank, let alone globally. He asked Treasury to provide the Committee with a memo detailing what legislation may be needed to empower FSOC to mandate harmonizatio of financial reform regulations. The Secretary of the Treasury is the permanent chair of FSOC.  The Chairman Emeritus is not alone in these concerns. Last December, before the Bipartisan Policy Center, Senator Mark Warner (D-VA), a key member of the Banking Committee, expressed frustration with FSOC's inability to foster converged finanicial regulations and said he would entertain a legislative fix. Calling FSOC an imperfect creation, Senator said that it has not become the arbiter of conflicting regulations that he had envisioned.