FSR Submits Letter to Senate Banking Committee Leadership Outlining Proposals to Spur Economic Growth

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FOR IMMEDIATE RELEASE
April 14, 2017

FSR Submits Letter to Senate Banking Committee Leadership Outlining Proposals to Spur Economic Growth

WASHINGTON, D.C. — The Financial Services Roundtable (FSR) today submitted a letter to Senate Banking Committee Chairman Crapo and Ranking Member Brown outlining policy proposals the Committee could consider to help spur economic growth.

FSR outlined the following policy areas to examine that fall under the Committee’s jurisdiction:

Regulatory Tailoring

FSR supports a regulatory system tailored effectively to bolster the financial services sector’s ability to serve consumers, grow the economy and create jobs. Regulatory tailoring should reflect the unique business operations, risk and capital profile of diverse financial services providers in the insurance, banking, finance and payment sectors.

FSOC Designation Authority and Processes 

Designating nonbank financial companies for supervision by the Federal Reserve Board has not worked. FSOC has unfairly designated companies as “systemically important” under a fundamentally flawed process and with lack compelling evidence. The designation process has failed to adequately consider the role of primary financial regulators, resulting in duplicative supervision and regulation, increased regulatory costs and burdens, and an unlevel playing field. Designations are impacting economic growth by discouraging investments and product and service offerings.

SEC Authority to Regulate Muni Disclosures 

The Committee should also consider granting the SEC the authority to directly regulate the disclosure requirements for state and local governments that issue municipal securities, which generally are held by retail customers. Right now, the SEC prescribes disclosures indirectly, through broker-dealers that act as municipal securities underwriters. It would be more efficient and better for retail investors if the SEC “removed the middle man” and directly regulated these disclosures. This is particularly timely given the need to finance state and local infrastructure projects that yield jobs and economic development.

Cybersecurity Rules

The Committee can help protect our financial system by exercising increased oversight over federal, state and even local agencies passing overlapping and conflicting cybersecurity rules. We strongly support rigorous cybersecurity standards, and the Framework promulgated by the National Institute for Standards and Technology (the NIST Framework) is the standard that most believe we should work toward. However, agencies across the board, asserting their unique authority over a particular industry or piece of a company are implementing their own unique regulatory standards on companies.

Durbin Amendment

In the payments space, federal government price controls on debit interchange rates is having an impact on, among other things, investments in security. Rather than saving customers money on their debit-card transactions, these price controls have resulted in the loss of some product offerings and has the potential to stifle innovation in the dynamic payments market. Put simply, in a modern economy government should not be in the business of setting prices between consenting economic parties. This law has the government picking winners and losers, at the expense of economic efficiency. Repealing federal government price controls on debit interchange rates will result in multiple benefits for the economy.

Housing Finance Reform

We also strongly believe that fixing our broken housing finance system will improve economic growth. Through The Housing and Economic Recovery Act of 2008, taxpayers covered $187 billion dollars in losses from Fannie Mae and Freddie Mac (GSEs), and the GSEs were placed into conservatorship. However, as a result of that bailout, the U.S. taxpayer is on the hook for virtually every mortgage made in America today. A transition from government conservatorship to a system that features more private capital is long overdue.

CFPB Reform 

The CFPB should be reformed in ways that will bring effective oversight, transparency and accountability. This will allow for an increase in responsible innovative financial products that enhance consumer choice and access to mainstream financial services products.

Tailoring Regulation for Insurance Companies 

Consumers and the overall economy also depend upon a strong, vibrant insurance sector, which helps protect consumers and businesses and provides stability and resiliency during critical times. Although insurance is state regulated, the existing federal regulatory framework impacts insurers and their consumers both directly and indirectly. FSR supports efforts to tailor the regulatory regime that touches on insurers.

FinTech

There are several proposals that seek to support and provide legal clarity to the ongoing convergence of financial services and technology – FinTech, which has the potential to bring millions of new people into the financial system. For example, the MOBILE Act, new legislation introduced in the House as H.R. 1457, would expand access to traditionally underserved communities by making it possible to open an account online or from a mobile device without ever having to visit a bank branch or office.

To read FSR’s full letter to Chairman Crapo and Ranking Member Brown click here.

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The Financial Services Roundtable represents the largest integrated financial services companies providing banking, insurance, payment and investment products and services to the American consumer. Member companies participate through the Chief Executive Officer and other senior executives nominated by the CEO. FSR member companies provide fuel for America’s economic engine, accounting for $92.7 trillion in managed assets, $1.2 trillion in revenue, and 2.3 million jobs. Learn more at FSRoundtable.org.

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