The Senate Banking committee today again took on Dodd-Frank implementation, but for the first time did so under Chairman Johnson (D-SD). Much of the focus was on the FSOC, with regulators defending themselves against charges that the SIFI-designation process would be problematic by promising yet another round of rulemaking before finalizing broad SIFI criteria. As in the past, FDIC Chairman Bair wants both quick action and a broad number of firms so designated. She also used her statement to raise a new systemic-risk fear – interest-rate risk – and highlight her longstanding call for new national mortgage-servicing standards. Chairman Johnson staunchly defended the CFPB against GOP assault, but he did press the Administration for action on all the vacancies at the financial regulators, getting a non-committal promise for action “soon” from the Treasury. Sen. Tester (D-MT) got Mr. Bernanke to make his strongest statement to date against the interchange rule (see FSM Report INTERCHANGE2) even as the FRB insisted it had little statutory authority to change the proposal. Sen. Schumer (D-NY) pressed hard on the adverse competitive impact of tough U. S. rules in areas like derivatives-related capital, but Chairman Bernanke countered that global regulators are working on comparable standards. Ms. Bair noted global efforts to improve resolution, expressing support for a U. K. effort to mandate loss-absorbent capital for systemic firms. This report assesses the session, which FedFin does not believe has fundamentally changed the framework for action on all of the rules in the works by the FSOC and financial regulators.
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