The American public is looking for “a strong, independent voice” to help implement financial reforms, and the newly created Systemic Risk Council (SRC) can help achieve progress toward those goals by publicly urging aggressive action, said SRC chair and Pew senior adviser Sheila Bair.
At a news conference at The Pew Charitable Trusts’ Washington, DC, offices, Bair noted that there were several systemic warning signs in the U.S. economy before the recession of 2008, and that the Dodd-Frank Act passed by Congress two years later was meant to deal with some of those issues. But she and other SRC members said the legislation’s reforms have been implemented slowly or not at all.
The SRC is comprised of a diverse group of experts in investments, capital markets and securities regulation, including senior adviser Paul Volcker, former chair of the Federal Reserve.
Bair said that “in many ways, the financial system faces larger potential challenges today than it did in the run-up to the 2008 crisis, given the troubled state of the European Union and uncertainties at home related to fiscal and monetary policy. We simply cannot afford to let it happen again. We have a lot of tools from the Dodd-Frank Act, but they must be used in the right way.”
At a June 18 news conference, Bair and the other speakers said the Financial Stability Oversight Council (FSOC) and Office of Financial Research (OFR), both created by the Dodd-Frank Act, have not been effective. In a “call to action” paper released at the event, SRC members listed six areas that “require priority attention by the FSOC and its members.” Those actions include finalizing rules to strengthen the quality and amount of capital held by the largest financial institutions, and improving the OFR’s data collection and analysis.