June 14, 2016

Brown Opening Statement at SEC Oversight Hearing

WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – released the following opening statement, as prepared for delivery, at today’s hearing entitled, “Oversight of the U.S. Securities and Exchange Commission.”

Brown’s remarks, as prepared for delivery, follow.

Senator Sherrod Brown - Opening Statement
Hearing: “Oversight of the U.S. Securities and Exchange Commission”

June 14, 2016

Thank you Chairman Shelby, and welcome to Chair White.

Chair White, over three years ago you were confirmed as Chair of the SEC and assumed the task of guiding the Commission’s significant rulemaking agenda under the Wall Street Reform Act and the JOBS Act. 

At that time, the destruction of $13 trillion in household wealth from the financial crisis was still fresh in our minds. 

The SEC and the other financial regulators had completed many of the Wall Street reform rulemakings and were evaluating how to finish the implementation of the remainder. 

When you last appeared before this Committee in September 2014, you testified that the staff was proceeding on the outstanding rules and that we could expect to see additional rules shortly. 

Although several rules have been proposed, and some finalized, many are still incomplete. 

In particular, the Commission has not finished the derivatives rules under Title VII of the Wall Street Reform Act and the path to their completion still seems unclear.

These rules are important because Title VII is a key part of the reforms to the financial markets. 

By increasing transparency, enhancing oversight, and moving to more resilient and stable trading platforms, Congress wanted to make sure future crises could be detected sooner and do less damage.

This is not entirely on the SEC’s shoulders.  But, there are certain markets, such as credit default swaps, that depend on the SEC. 

Until the rules are completed, the SEC and other regulators will not have the benefit of a framework that provides transparency and access to market data.

Another Wall Street Reform Act rule that remains outstanding would prohibit incentive compensation that could lead to excessive risk taking or significant losses at financial firms. 

The multi-agency rule was proposed in 2011 and only re-proposed last month.  Six years after Wall Street Reform became law, this rule still isn’t finished. 

A final rule would provide the market and the public with some assurance that senior executives at financial institutions will not be rewarded for taking inappropriate risks that could harm the markets, their employees, or the economy. 

I urge you and the other financial regulators to finish that rule as quickly as possible.

During your confirmation hearing, you stated that you would make strengthening enforcement a high priority throughout your tenure. 

You said then, and I agree, that “investors and market participants need to know that the playing field of our markets is level and wrongdoers—individual and institutional, of whatever position or size—will be aggressively and successfully called to account by the SEC.” 

Yet, time and again, we see repeat offenders enter into settlement after settlement that seem to have no effect on stopping the problem in the first place.  As the cop on the beat, at what point is the SEC going to stop handing out warnings and start giving tickets?

This is evident in the waiver process.  The SEC has routinely granted waivers to banks following a variety of violations that could have resulted in the loss of certain privileges under the securities laws. 

Unfortunately, granting those waivers eliminates the significant consequences that could promote better overall compliance at those institutions. 

Finally, I’d like to return to an issue that has been discussed many times in this Committee.  Democrats in the Senate have repeatedly asked you to begin work on a corporate political spending disclosure rule. 

When you were last here, you acknowledged the “intense interest of investors and others” in the issue, but you pointed to the low priority of mandatory rulemaking. 

I realize this year’s Appropriations Bill limits the SEC’s work on that rule, but it should not prevent you from doing anything at all. 

I sincerely hope that you begin work on a corporate political spending disclosure rule.  The interest in it has only become more intense. 

Chair White, I am interested in your updates today.

Thank you Mr. Chairman.