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June 17, 2009 at 08:00 PM
The Securities Industry and Financial Markets Association (SIFMA) has issued a statement regarding the Obama Administration’s regulatory reform proposal:
“The financial turmoil of the last year revealed deep and serious flaws in our regulatory system,” says SIFMA President and CEO Timothy Ryan. “The financial services industry believes it is critical to our nation’s economy that we work with policymakers in Washington to enact comprehensive reform this year to improve the accountability, transparency, investor protection and oversight of financial markets.
“With their proposals today, the Administration has moved this critical debate from broad discussion to specific action – this is an important step forward,” Ryan says. “We have a once-in-a-generation opportunity to rebuild our regulatory structure so that our financial system is more stable, more resilient and better underpins a dynamic US economy. The public expects no less. SIFMA looks forward to working with the Administration and Congress to complete important reforms over the next several months.”
SIFMA has previously outlined a number of elements that are critical to a new regulatory structure. These include:
- The creation of a single financial stability supervisor, with oversight authority to make uniform rules for all financial institutions and markets to the extent necessary to reduce systemic risk and with exclusive consolidated supervisory authority over systemically important financial groups;
- The expansion of resolution authority to non-bank financial institutions so to wind-down those institutions that pose a systemic risk to the economy;
- The industry seeks a return to the basics and is making smart reforms to industry practices is areas such as securitization, tightening underwriting practices and increasing transparency to protect investors;
- New policies that bring greater regulatory transparency to the derivatives markets, while ensuring that derivatives continue to be widely available to serve their critical role of increasing credit availability to borrowers; and
- Guidelines for Compensation developed by the industry to better align long-term performance and effective risk management, because compensation should be aligned with the best interests of shareholders, the financial system and the economy.
For its part, FINRA – the Financial Industry Regulatory Authority – has expressed its views on the reform proposals, as outlined by FINRA Chairman and CEO Rick Ketchum at a luncheon in Washington, D.C. on June 17.
“The Obama administration has identified a number of key priorities, which include controlling systemic risks, tightening regulation of non-bank activities, enhancing protections for consumers, establishing a resolution mechanism for the resolution of systemically important financial holding companies, and improving regulation throughout the world,” Ketchum says.
