Just as a new poll of Americans shows their continued support for tough regluations on Wall Street under Dodd-Frank, regulators and lawmakers continue to sharply criticize the Financial Stability Oversight Council that the reform law created.
A poll conducted at the end of June by Lake Research Partners on behalf of Americans for Financial Reform and the Center for Responsible Lending found that voters agreed by “wide margins” (65%) that there should be more government oversight and regulation (62%) of financial companies.
Support for the law’s extension of oversight to previously unregulated entities also remains strong: 75% of voters favor the law (53% strongly), compared to only 19% who oppose it. The popularity of the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed in 2010, continues to extend across party lines, with 86% of Democrats, 69% of independents and 68% of Republicans favoring the law.
The poll found that by a 3-to-1 margin, voters agree that getting tougher on Wall Street will help prevent future crises, rejecting the counterargument that regulation will damage the economy. This is true of Democratic, independent and Republican voters alike – by margins of 85% to 7%, 78% to 9%, and 72% to 15%, respectively.
Yet in a recent speech, Michael Piwowar, one of the Republican commissioners at the Securities and Exchange Commission, said that the Financial Stability Oversight Council created under Dodd-Frank is actually the “Firing Squad on Capitalism.”
Piwowar said during a July 15 speech before the American Enterprise Institute, that the financial stability council known as FSOC — the “Council” or the “Unaccountable Capital Markets Death Panel,” if you will — has “gained notoriety for, among other things, being unaccountable and non-transparent.”
Said Piwowar: “At least with the Dodd-Frank Act, however bad it is, what you see is what you get; unfortunately, the Council’s discussions and actions are being conducted largely in the dark.”
FSOC is charged with identifying risks to U.S. financial stability; promoting market discipline; and responding to emerging risks to the stability of the U.S. financial system. FSOC consists of 10 voting members and 5 nonvoting members including federal financial regulators, state regulators and an independent insurance expert appointed by the president.
The House’s recently passed spending bill, H.R. 5016, included an amendment put forth by Rep. Scott Garrett, R-N.J., chairman of the Capital Markets Subcommittee, which would prohibit the secretary of the Treasury and the head of the SEC — both voting members of FSOC — from designating nonbank financial companies as systemically important financial institutions (SIFIs).
FSOC, as created under the Dodd-Frank Act, “has the ability to label non-banking financial companies as systemically important and has essentially codified an endless cycle of too-big-to-fail,” Garrett said in a statement.
“With every reckless designation of a non-bank company as a SIFI, FSOC makes our economy more dangerous and unstable,” Garrett said after the bill’s passage. “FSOC is not working out as intended …We must prevent government regulators from expanding the doctrine of too-big-to-fail into other parts of our economy. And we must not allow too-big-to-fail to take root in the nonbank financial sector. These companies are too important as a counterbalance to the mega-banks for us to ruin them with crony capitalism.”