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SIFMA president and CEO Kenneth E. Bentsen, Jr., today delivered introductory remarks on prudential regulation at an event co-hosted by SIFMA and The Clearing House in Washington, D.C. An excerpt is as follows with full remarks found here: http://www.sifma.org/news/news.aspx?id=8589960684.
“Certainly, our financial market system is vastly safer and more resilient than it was at the onset of the financial crisis. But to be clear, notwithstanding the rebound from the recession, US economic growth remains subpar as compared to previous post recessionary periods, and one must consider that the balance between seeking financial stability and economic growth may well be, and I believe is, out of balance."
“Before we have even implemented Basel 3, we have begun working on Basel 4 in a way that causes regulatory requirements to further diverge from the way that banks manage risk internally. For example, we are making leverage ratios a binding constraint over the risk weighting of assets. We are replacing individual models with standardized models, in a one-size-fits-all approach that may cause additional unintended hindrances to capital formation and growth. Finally, we are raising capital around operational risk, which is often far more difficult to quantify.”
“The Global Financial Markets Association, which is the umbrella organization for SIFMA and our affiliates in Europe and Asia – AFME and ASIFMA – has commissioned an independent report with Oliver Wyman on interaction, coherence and overall calibration of post-crisis Basel reforms.”
“While we have come a long way in our efforts to reduce risk, we must be careful not to tip the scales too far, but instead strike a balance that works. If we overreach, the negative consequences on the flow of capital and economic growth could be substantial.”
“I would also urge policy makers not to lose sight of what has already been implemented and to consider the cumulative impact of the rules when enacted together, including the related costs and interaction of the rule with new and existing rules that could ultimately be in conflict with one other.”
