Kirk, others seek more transparency in financial transparency system WASHINGTON – U.S. Sens. Mark Kirk (R-Ill.), Tom Carper (D-Del.), Pat Toomey (R-Pa.), Claire McCaskill (D-Mo.) and Jerry Moran (R-Kan.) sent a letter to Treasury Secretary Jack Lew, chair of the Financial Stability Oversight Council, regarding a study on the asset management industry released Sept. 30, 2013, by the Office of Financial Research. The study has been largely criticized by industry and consumer groups alike who have pointed to its lack of identifiable modeling and metrics, as well as the lack of transparency and accountability in making the conclusions and broad assumptions made by the OFR in the Study. “It is important for the Financial Stability Oversight Council to examine to determine what threats may be posed to the financial industry,” Senator Kirk said. “We do not question the role that the Office of Financial Research has in providing the FSOC with valuable data and research, but I remain concerned about the lack of process and methodology for examining the financial industry and its firms. This study calls into question not only the credibility of the OFR but also the validity of the FSOC’s work and designation process.” The Dodd-Frank Act of 2010 established the OFR to provide analysis of risk in the financial system, which the FSOC and other agencies use in taking regulatory actions such as designating a firm as a systemically important financial institution (“SIFI”). Such a designation leads to more intensive scrutiny and regulation by federal agencies. There are several examples of inaccurate data used within the study, they said. The OFR also failed to implement recommendations made by the GAO in March of 2013, namely calling for the FSOC and OFR to identify a process and metrics for measuring and reviewing industries and their activities. The Study also lacked transparency and accountability, which led Senator Kirk and the co-signers to call for the study to be withdrawn and for the FSOC to not rely on the study in its designation of any firm as a SIFI. The senators also urge that any future study done by the OFR should have greater transparency and be done in greater consultation with the primary regulator.
Posted on: Fri, 24 Jan 2014 17:03:46 +0000