In a speech on July 15, 2014, SEC Commissioner Michael S. Piwowar expressed his views about the Financial Stability Oversight Council (FSOC) operating in secrecy as it tries to expand its regulation of financial institutions and the capital markets.
Commissioner Piwowar opened his speech with a number of phrases about FSOC, calling it, among other things:
The Firing Squad on Capitalism
The Vast Left Wing Conspiracy to Hinder Capital Formation
The Bully Pulpit of Failed Prudential Regulators
The Dodd-Frank Politburo
The Modern-Day Star Chamber
The Unaccountable Capital Markets Death Panel
But how does Commissioner Piwowar really feel about FSOC?
FSOC members include the chairs of various commissions and boards (including the SEC), but not the individual commissioners or board members. Commissioner Piwowar complained that FSOC rebuffed his attempt to attend its meetings as a non-participating guest, which, he said, was disappointing but not surprising. But, he said, FSOC also shut out Congressman Scott Garrett, the Chairman of the Subcommittee on Capital Markets and Government-Sponsored Enterprises, from FSOC meetings. He called this action “shocking, appalling and downright insubordinate.”
Commissioner Piwowar accused FSOC, led by the “alpha dog” Board of Governors of the Federal Reserve Board, of starting a turf war by asserting broad regulatory authority over matters that are exclusively in the SEC’s jurisdiction, thus compromising the SEC’s mission to protect investors, maintain fair, orderly and efficient markets, and promote capital formation.
As an example of the Federal Reserve Board’s “attempt to gain authority over capital markets actors,” the Commissioner cited FSOC’s “much-discussed hubris” in recommending money market fund regulatory reforms. “It would be comedic,” he said, “if not in such a serious context, that it did so while publicly acknowledging” that the SEC is best positioned to implement money market fund reforms.
To sum up, the Commissioner called for more transparency at FSOC, and said he supported efforts by Representative Garrett to make FSOC “accountable and transparent.”
The Commissioner, however, stopped short of accusing FSOC of trying to regulate the SEC as a Systemically Important Financial Institution.