During a hearing where members of the Financial Stability Oversight Council, or FSOC, appeared before the full Committee, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, underscored the need for a coordinating regulatory body in the wake of the financial crisis and highlighted its work to provide stability to investors, consumers and our national economy.
Waters reminded Members of the damage caused by the crisis, while noting that repeated attempts by Republicans to attack FSOC are an extension of their efforts to dismantle Wall Street Reform by undermining one of its core components.
The leading Democrat also pointed to the Council’s actions that have ensured stability and growth and helped to establish a system to rapidly detect and respond to emerging threats, which is critical to preventing the sort of risks and exposure that brought our economy to the brink of collapse seven years ago.
Full text of Waters’ remarks is below.
“Thank you, Mr. Chairman, and thank you to the distinguished members of the Council for joining us for this hearing.
We gather together today to examine the activities of the Financial Stability Oversight Council, or FSOC, which since the passage of the Dodd-Frank Act has fulfilled its mandate to monitor and respond to the types of systemic risk that nearly brought our economy to its knees in 2008.
This important work cuts across every corner of our banking, capital markets, housing and insurance sectors – which is why Congress specifically designed the Council to draw upon all of the expertise of the witnesses here before us today.
Unfortunately, many of my colleagues on the other side of the aisle seem to have caught a convenient case of amnesia about this important mandate. Indeed, it was only seven short years ago that our economy lost nearly 16 trillion dollars in household wealth, 13 trillion dollars in economic growth, and nine million jobs. In large part, this was because our regulators were too often caught in silos, not communicating with one another, and not considering gaps between their agencies or interconnectedness within the financial sector. Even worse, we saw too many cases where regulators were “captured” by the very entities that they were meant to police.
Many of these lessons appear to be forgotten. As we have seen with recent mark-ups, as well as attempts to laden government funding bills with poison pill “riders,” some opponents of Dodd-Frank are far too focused on dismantling Wall Street Reform by attacking core elements like the FSOC and the Consumer Financial Protection Bureau.
These attempts to roll-back Dodd-Frank started the minute this reform was signed into law. And make no mistake, these attempts continue today, even as our economy has experienced a remarkable rebound with 69 straight months of positive job numbers, GDP growth, and a housing market where sustainable access to credit continues to expand – all of which are signs pointing to the sort of stability and growth that the law was designed to promote.
FSOC has contributed to this growth and stability by convening the ten component regulatory agencies for periodic information-sharing about emerging risks, and reporting on those risks to the public. Further, the Council has now designated four institutions for enhanced supervision by the Federal Reserve. This designation will ensure that companies like AIG never again are able to engage in risky, unregulated activity that could threaten the entire global economy.
And far from the talking points of some members on the opposite side of the aisle, this enhanced oversight is now causing some large nonbank financial companies to consider whether simplifying their structures and breaking themselves up might provide better value to their shareholders.
I am also encouraged that the money market fund industry is now less susceptible to bank-like runs as a result of the pressure the FSOC brought to overcome gridlock at the Securities and Exchange Commission.
Finally, I appreciate that the Council has made an effort to conduct its work in a manner that is responsive to feedback from Congress and outside stakeholders. For example, with its announcement in February, the FSOC took the step of voluntarily agreeing to certain due process and transparency measures that will further serve to improve their operations. This type of dialogue and openness to feedback should be applauded.
As we hear from the voting members of the Council today, I will be interested to learn more about their inter-agency collaboration and their work to address emerging threats. Again, this work is central to preventing the types of contagion and risk that nearly crashed Main Street just seven years ago.
