Will FSOC Be a Priority for Treasury Pick Jack Lew?
From American Banker
By Donna Borak
February 5, 2013
WASHINGTON — Recently departed Treasury Secretary Timothy Geithner was clearly dedicated to making the Financial Stability Oversight Council work, despite fears that the group of financial regulators would prove unwieldy and ineffective.
The question remains, however, whether his nominated successor, Jack Lew, will be as committed to the council.
Ever since the Dodd-Frank Act created the council, many have been skeptical that it could function. They cite its sheer size — 10 voting members and five nonvoting members — and its diversity, with the agencies represented covering credit unions, insurance and banking. Yet regulators have said the group has been helpful in airing contentious issues and taken steps toward designating systemically important nonbanks and reforming money market mutual funds.
Whether that early success continues, however, may depend on the Treasury secretary, who chairs the council. That has left some observers wondering how focused Lew will be on the group, especially given other pressing fiscal issues he must address.
“This will be interesting to see,” said Satish Kini, co-chair of the banking group Debevoise & Plimpton. “It is very much an open question of how attentive he will be with FSOC, whether he will delegate a greater responsibility to his staff or to the deputy Treasury secretary. I think we will probably see Secretary Lew less involved in some of the details it appears that Secretary Geithner was.”
So far Lew, known almost exclusively for his budgetary work, remains a blank slate concerning critical banking issues, including the implementation of Dodd-Frank, whether “too big to fail” has been adequately addressed and mitigating systemic risk. The first glimpse of his views on those and other issues will likely come at his confirmation hearing, which has yet to be scheduled.
“How he handles FSOC and other things will be signaled by his confirmation hearings,” said Cornelius Hurley, director of the Boston University Center for Finance, Law & Policy. “That’s why I’m hopeful when asked the questions in his confirmation hearings, he doesn’t spout the party line that Dodd-Frank fixes ‘too big to fail’ and the CFPB has to have one head. That’s not helpful…”
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