Recommendations Aimed at Maintaining the Regulator's Monetary Independence while Modernizing Regulatory Policies
WASHINGTON, D.C. – The U.S. Chamber of Commerce Center for Capital Markets Competitiveness (CCMC) hosted an event today where U.S. Chamber Chief Economist Dr. Martin Regalia discussed the expanding role of the Federal Reserve and a report with recommendations for reform at the Federal Reserve was released.
“Regulations adopted by the Federal Reserve have a significant impact on Main Street businesses and economic growth. As its regulatory powers have greatly expanded, the Federal Reserve must now take additional steps to ensure it has a transparent, accountable due process when writing rules. Our reforms would allow the Fed to execute its mission and become a better regulator by using smart regulatory tools to get the broadest input to achieve financial stability and growth,” said David Hirschmann, president and CEO of CCMC. “While the Chamber will continue to strongly support and defend the Federal Reserve’s independence in setting monetary policy, all regulators benefit from needed due process and accountability when it comes to writing the rules of the road. These reforms, many of which should also be implemented by other banking regulators, will help ensure regulators adopt regulations that will both enhance economic growth and the long-term stability of our financial system.”
The recommendations outlined in Federal Reserve Reform: Securing Regulatory Transparency and Accountability, look at ways the Fed can maintain its monetary independence while modernizing its regulatory policies and call on the regulator to:
- Create a transparent strategic regulatory plan;
- Subject regulation to transparent, robust cost-benefit analysis;
- Tailor rules for non-bank systemically important financial institutions (SIFIs);
- Hold public meetings to consider regulations and international regulatory agreements;
- Shine more light on interactions with the FSB, the BIS, the International Association of Insurance Supervisors (IAIS), and the Basel Committee on Banking Supervision (BCBS);
- Consolidate examinations and data-collection with other regulators;
- Fill the position of Vice Chair of Supervision;
- Enter into memorandums of understanding (MOUs) with functional regulators.
Regalia’s remarks focused on how the Fed became one of the nation’s most powerful regulators, and were followed by a panel discussion on how to make the Fed a more transparent and accountable regulator.
“The Fed currently has a vast regulatory reach and we need to have a debate as to whether our country’s central bank should also be the central financial institution regulator,” Regalia said. “Our suggested reforms will make the Federal Reserve and the other banking regulators more efficient in executing their mission by using smart regulatory tools and these recommendations will correct flaws in our system in a way that will benefits the Federal Reserve, the financial markets and the overall U.S. economy.”
You can find a copy of the report and recommendations here.
Since its inception in 2007, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.