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The Securities Industry and Financial Markets Association (SIFMA) today released the following statement from SIFMA President and CEO T. Timothy Ryan, Jr. in response to House Financial Services Committee passage of the Financial Stability Improvement Act of 2009.
"Today’s vote is another crucial step forward toward regulatory reform. As we have said before, protecting against systemic risk is one of the key reforms to our regulatory system that will ensure we do not face another crisis like last year’s.
“We firmly support establishing a systemic risk supervisor that is competent, respected, accountable and able to make tough decisions in a timely manner. We also support a clear, unambiguous resolution authority to wind down failing firms in an orderly fashion. The legislation passed by the Financial Services Committee today goes far in accomplishing these goals, but we remain concerned with several provisions that we believe could do more harm than good.
"Specifically, we do not support the amendment that would require the FDIC to impose “haircuts” of up to 20 percent on all secured creditors of an institution in resolution. We are also concerned that the resolution authority framework contained in the legislation relies too heavily on the bank insolvency statute to resolve non-bank claims. Both of these provisions would negatively affect the efficient operations of the credit markets, increasing the cost of raising capital, and thus raise the cost of loans for consumers and businesses.
“The industry remains fully engaged with policymakers as the legislative process moves forward to fix the gaps in our regulatory system, protecting against systemic risk, while maintaining the industry’s ability to address the necessary credit needs of small businesses, families and the broader economy.”
