WASHINGTON BUREAU — Treasury Undersecretary Neal Wolin today lashed out at those seeking to delay or otherwise impede implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, vowing that the administration will move forward “quickly, carefully and responsibly.”
The Obama administration “will continue to oppose efforts to slow down, weaken, or repeal these essential reforms,” Wolin said today in Washington during an event organized by the Pew Charitable Trusts.
In response to a question, Wolin said the administration will move in the “immediate future” to name an independent member with insurance expertise to the Financial Stability Oversight Council.
The Dodd-Frank Act requires that the president nominate the insurance member and that Senate confirm the insurance member.
Once seated, the independent FSOC member with insurance expertise will be the only voting member of the FSOC with an interest in insurance.
John Huff, the Missouri insurance director, who represents the National Association of Insurance Commissioners, Kansas City, Mo., in FSOC proceedings, is a non-voting member of the council.
Michael McRaith, the incoming director of the U.S. Treasury Department’s Federal Insurance Office, will be another non-voting FSOC member with insurance expertise.
Also during the appearance, Wolin received pointed inquiries from insurance industry representatives about charges that the FSOC has lacked transparency when dealing with insurance issues.
Wolin, who has been a general counsel and property-casualty business head at Hartford Financial Services Group Inc., Hartford (NYSE:HIG), defended the FSOC. He said it is “a key component” of Dodd-Frank, and that it has a mandate to coordinate across agencies and instill joint accountability for the strength of the financial system.
“Already, we have worked through the FSOC to develop an integrated roadmap for implementation, to coordinate an unprecedented six-agency proposal on risk retention, and to develop unanimous support for recommendations on implementing the Volcker Rule,” Wolin said.
As chairman of the FSOC, “Treasury will continue to make it a top priority that the work of the regulators is well-coordinated,” Wolin said.
Wolin spoke as Republicans in the House introduced H.R. 1573, a bill that could delay action on completion of the rules implementing the Dodd-Frank Act derivatives provisions.
H.R. 1573 would extend the implementation deadline for the derivatives provisions, Title VII, by 18 months.
The bill was introduced Friday, before Congress left for a two-week recess, by Rep. Spencer Bachus, R-Ala., chairman of the House Financial Services Committee; Rep. Frank Lucas, R-Okla., chairman
of the House Agriculture Committee; Rep. K. Michael Conway, R-Texas, and Rep. Scott Garrett, R-N.J., chairman of the Financial Services Committee’s capital markets subcommittee.
The bill sponsors say a report by the inspector general of the Commodity Futures Trading Commission (CFTC) supports the view that regulators are moving too fast in implementing Title VII.
The CFTC staff is using a “bare minimum” approach to cost-benefit analysis, according the CFTC inspector general.
“[I]t is clear that the Commission staff viewed section 15(a) compliance to constitute a legal issue more than an economic one, and the views of the Office of General Counsel therefore trumped those expressed by the Office of the Chief Economist,” officials say in the report. “We do not believe this approach enhanced the economic analysis performed.”
Bachus issued a statement saying a delay is necessary.
“All of us know that on the highway ‘speed kills’,” Bachus says in the statement. “Speed can also kill jobs when Washington rushes sweeping regulations into place without giving the public adequate time to comment.”
Wolin touched on the Dodd-Frank derivatives provisions today.
“Critics claim that reforms to the derivatives markets will harm liquidity and inhibit effective allocation of capital,” Wolin said.
But regulation of the over-the-counter derivatives markets is a “critical element of the Dodd-Frank Act,” Wolin said.
The financial crisis demonstrated that without adequate transparency and capital reserves, derivatives can allow hidden risks to build and leave counterparties without sufficient buffers to sustain losses, Wolin said.