Washington, D.C. – U.S. Representative Ed Royce (R-Calif.) questioned members of the Financial Services Oversight Council (FSOC) regarding regulators creating systemic risk, transparency at the Office of Financial Research (OFR), and the designation of insurers as systemically important financial institutions (SIFIs) during today’s House Financial Services Committee hearing “Oversight of the Financial Stability Oversight Council.”
“Last month, in a hearing before this Committee about due process issues with the FSOC, Professor Jonathan Macey of Yale Law School stated ‘that with respect to the actions that the FSOC have already taken, there is a significant danger of increasing, rather than decreasing, systemic risk.’ And his point as he explained was this because the FSOC is ignoring certain risk mitigation strategies and herding entities into particular risk strategies, which decreases diversification and then increases the systemic risk,” began Rep. Royce.
“This could also happen indirectly with companies making choices to merge, sharing in the cost of compliance and creating greater economies of scale; we have seen this in the banking sector. Or more directly with the implied or explicit backing of the government – as in the case with the GSEs. So I was going to ask Mr. Curry, do you view …read more
Source:: U.S. Rep. Ed Royce