June 25, 2014
WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing titled “The Financial Stability Oversight Council Annual Report to Congress.”
Below is Chairman Johnson’s statement as prepared for delivery:
“Good morning. I call this hearing to order.
“Today we welcome Secretary of the Treasury Jack Lew back to the Committee for his testimony on the 2014 Financial Stability Oversight Council Annual Report to Congress. FSOC has played a critical role in coordinating the implementation of the Wall Street Reform Act among state and federal regulatory agencies.
“Since the last hearing on the FSOC Annual Report, the agencies have reached some important milestones for Wall Street Reform implementation, including a finalized Volcker Rule, new bank capital and leverage rules, enhanced prudential standards for large U.S. banks and the U.S. operations of large foreign banks, and clearing requirements in swaps markets. And for the first time, FSOC made final determinations with respect to systemically important nonbank financial companies. Secretary Lew has on numerous occasions stated the importance of finalizing the financial reform rulemakings, and I look forward to hearing about the continued progress.
“In addition, the 2014 Annual Report lays out a number of potential risks that could threaten the stability of the financial system. These include issues that have been noted by FSOC in the past, such as reliance upon short-term wholesale funding, the risk-taking incentives of large institutions, and operational risks like cyber-attacks. It also includes newly identified risks, such as potential threats to financial stability from new financial products, business practices and regulatory arbitrage. The recommendations made by the Council address structural vulnerabilities that remain in the system and point to the need for heightened risk management and supervisory attention.
“Now, nearly four years after the passage of the Wall Street Reform Act, regulators should continue to collaborate with each other, and with the private sector, to determine what is working, and what more needs to be done to ensure that financial markets remain safe, transparent and stable. I have no doubt that FSOC will continue to play a key role in leading that effort.”