The Financial Stability Oversight Council, which is led by Treasury Secretary Jacob J. Lew, has cut commission members out of discussions over the risk posed by large asset management firms such as BlackRock Inc., Aguilar said in a speech at a Mutual Fund Directors Forum conference in Washington.
The SEC and Treasury’s Office of Financial Research, which provides support to the FSOC, have differed over efforts to study the $53 trillion asset-management industry. The research office, known as OFR, wrote in a September report that money managers could pose threats to the U.S. financial system when reaching for higher returns, herding into popular asset classes or amplifying price movements with leverage.
The study had “significant factual and analytical defects” and shouldn’t be used as the basis for policy decisions, Aguilar said in his speech.
“The work of FSOC and OFR to identify and mitigate systemic risk is important,” Aguilar said. “However, there is real danger in that work being compromised if the full five-member commission is cut out of the process.”