Wolin Pushes Back Against Republican Efforts To Delay Dodd-Frank

NU Online News Service, April 19, 2:32 p.m. EDT

Treasury Undersecretary Neal Wolin lashed out at those seeking to delay or otherwise impede implementation of the Dodd-Frank financial services reform law, vowing that the administration will "move forward…quickly, carefully and responsibly."  

Wolin says the administration "will continue to oppose efforts to slow down, weaken, or repeal these essential reforms."

Wolin is a former top official at The Hartford, where he served both as general counsel and later as head of its property and casualty business.

He made his comments as Republicans in the House introduced legislation, H.R. 1573, that would delay action on rules implementing the derivatives provisions of the legislation, Title VII, by 18 months.

The bill was introduced Friday, before Congress left for the two-week Passover-Easter 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 legislators cite a report by the Inspector General of the Commodity Futures Trading Commission (CFTC) that they say supports their view that regulators are moving too fast in implementing Title VII.

Regarding derivatives, Wolin says "critics claim that reforms to the derivatives markets will harm liquidity and inhibit effective allocation of capital."

But he says regulation of the over-the-counter derivatives markets is a "critical element of the Dodd-Frank Act."

He adds that 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.

Besides defending the derivatives provisions and the administration's efforts to implement those promptly, Wolin also touches on the work on the Financial Stability Oversight Council (FSOC).

Critics, including the insurance industry, claim that the FSOC is not coordinating with primary regulators, such as the National Association of Insurance Commissioners.

But, Wolin defends the FSOC, stating that it is "a key component" of Dodd-Frank and 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 road map 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 says.

As chair of the FSOC, "Treasury will continue to make it a top priority that the work of the regulators is well-coordinated," Wolin adds.

Wolin also says the administration will move in the "immediate future" to name the independent member of the FSOC with insurance expertise. Under Dodd-Frank, the administration must nominate such an individual, who must then be confirmed by the Senate.

But, in a statement, Rep. Bachus again voices support for delay.

Bachus counters that the comment period for Dodd-Frank rules has sometimes been barely 30 days. "At the current breakneck pace, it is difficult for individual firms—especially small businesses—and the public at large to meaningfully participate and offer their insights and observations. The implementation of the massive Dodd-Frank Act may be daunting for regulators, it may be intimidating for them, but that's no excuse to limit the public's participation and abandon sound rulemaking practices."

Meanwhile, the Federal Reserve Board is proposing a regulation dealing with how it will regulate non-banks such as insurance companies which operate savings and loans.

It is doing so as part of a provision of the Dodd-Frank law that dissolves the Office of Thrift Supervision and shifts its responsibilities to the Fed and the Office of the Comptroller of the Currency.