Letter Regarding Hearing Entitled Financial Stability Oversight Council Annual Report to Congress

October 3, 2011

The Honorable Tim Johnson
Chairman
Committee on Banking, Housing and Urban Affairs
United States Senate
Washington, DC 20510

The Honorable Richard C. Shelby
Ranking Member
Committee on Banking, Housing and Urban Affairs
United States Senate
Washington, DC 20510

Dear Chairman Johnson and Ranking Member Shelby:

The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, believes that an effective and coherent regulatory structure is needed to ensure the safety and soundness of the financial markets.

As the Senate Committee on Banking, Housing and Urban Affairs holds a hearing entitled Financial Stability Oversight Council Annual Report to Congress, the Chamber would like to draw your attention to a report, The Unfinished Agenda (the Report). This report was released by the U.S. Chamber on July 19, 2011, to highlight the various aspects of financial regulatory reform that were left unaddressed by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

The foundation of the American financial regulatory system was created during the New Deal and in some cases the Civil War. It was apparent to many bi-partisan observers before the financial crisis that this patchwork regulatory system was inadequate to address the needs of a 21st century economy.

While Dodd-Frank attempted to grapple with some of these issues, it effectively built upon the existing system without concurrently achieving transformative change. Accordingly, the number of regulators has grown, no effective means has been created to deal with conflicting regulations or jurisdictional disputes amongst regulators, the amount of data collection and duplicative requests will increase and it appears that the regulatory systems to perform the cost-benefit and economic analysis systems are inadequate to handle the implementation of the hundreds of Dodd-Frank rulemakings.

The report identifies specific areas where the work of regulatory reform is left undone including:

• Rationalizing the U.S. regulatory structure;
• Fundamentally reforming regulatory agencies;
• Making nongovernmental policy makers accountable;
• Restoring integrity to litigation and enforcement practices; and
• U.S. Competiveness and engagement.

These issues need to be addressed to allow for the capital formation that is necessary for the economy to create the 20 million jobs in 10 years to recover from the recession and restore the United States to prosperity. Keeping that in mind, the Chamber believes that the Committee should seek answers to the following questions including:

• How can the regulatory system be rationalized and made more efficient?
• How can the Financial Stability Oversight Council resolve conflicting regulations, jurisdictional disputes, and competing regulatory requests?
• How can data collection requests be streamlined and cooperation amongst regulators be promoted?
• How can agencies more effectively use economic analysis to clearly demonstrate the costs and benefits of proposed rules?

The Chamber believes that the answers to these questions can help formulate Congressional action needed to resolve the outstanding issues in the report.

The Chamber looks forward to working with the Committee on creating a coherent and effective regulatory structure to ensure the vibrancy of American capital markets.

Sincerely,

R. Bruce Josten

Cc: The Members of the Senate Committee on Banking, Housing and Urban Affairs