WASHINGTON Jan 29 The head of a U.S. Treasury
Department research unit on Wednesday told lawmakers that a
controversial September report was meant to "shine a spotlight"
on potential risks of asset managers, not prompt tougher
regulation of specific firms.
Richard Berner, director of the Office of Financial
Research, sought to answer some lawmakers' critiques of the
report, which they said misinterpreted aspects of asset
managers' activities. Some industry groups said the office did
not do enough to incorporate their views in the report.
On Wednesday, Berner said his office did consider feedback
from the asset management industry and from other regulators
while it worked on the report.
"There is not a single asset manager, not a single trade
group or representative of asset managers who asked to have a
meeting with us that we turned down," Berner said during his
first appearance before a U.S. Senate Banking subcommittee to
discuss his agency.
The office was created by the 2010 Dodd-Frank law and
charged with plugging holes in financial data. Lawmakers
believed these research gaps allowed problems that contributed
to the 2007-2009 financial crisis to go unnoticed.
The research office, or OFR, produced the asset management
report at the request of a group of regulators called the
Financial Stability Oversight Council. That group designates
nonbank firms for tougher oversight if it thinks their failure
could threaten markets.
The OFR's report found the activities of such as BlackRock
and Fidelity could be risky if, for example, they all
crowded into the same assets at once. It did not discuss risks
posed by specific firms.
Berner said the report considered potential risks across the
industry and was not meant to be used in designating individual
asset managers for stricter regulation.
But the report has come under attack by the industry, and
even privately among officials at the Securities and Exchange
Commission, which regulates asset managers.
Since its release, a growing number of lawmakers have also
spoken out against the report, saying the OFR misrepresented
aspects of the industry and relied on flawed or incomplete data.
A House of Representatives financial services subcommittee
also plans to hold a hearing on the topic next week.
Several lawmakers have written to Berner or to Treasury
Secretary Jack Lew to criticize the report.
Senator David Vitter, a Louisiana Republican, on Wednesday
said the office did not include enough input from the industry.
"I think if you talk to them and ask them, they will say,
'Yeah, we had a meeting and we got no reaction from anyone about
what the thinking was or where this might be headed,'" Vitter
Berner said the OFR's exchanges with the industry were
"vigorous" and that the office continued to seek outside groups'
feedback on its work.