Securities and Exchange Commission Chairman Mary Schapiro is arguing against a proposal from the Obama administration, which is reportedly considering the creation of a consolidated commission to oversee consumer financial products.
According to the Washington Post, Schapiro insists the creation of such a commission would damage investment protection grounded by the SEC’s long established experience on regulating mutual funds.
“Schapiro’s remarks are likely to presage an intense debate over the future of financial regulation,” write Washington Post staff writers Zachary A. Goldfarb and Binyamin Appelbaum. “A major business lobby yesterday expressed skepticism about adding a layer of regulation. Meanwhile, prominent consumer groups, which have long argued that regulatory agencies have not adequately protected consumers from risky mortgages and tricky credit cards, welcomed the idea of a new commission.”
The Post reports groups, including the Mutual Fund Directors Forum and the U.S. Chamber of Commerce are “wary” of removing the SEC’s authority over mutual funds.
“What you want is regulators who really know the businesses they’re regulating. Defusing expertise among regulators is not a good idea,” said David Hirschmann, president of the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce told the Post.
Harvard University law professor Elizabeth Warren, chairwoman of the Congressional Oversight Panel on economic recovery, however, has long advocated for the creation of a consumer financial products commission, according to the Post.
“Our regulations need to learn and change as the market innovates,” Warren said. “Congress can outlaw practice X and practice Y, but to get real change and nuanced change takes a regulatory agency with expertise and flexibility.”