WASHINGTON May 19 A top U.S. Treasury official
said Monday she is surprised how hard the asset management
industry has lobbied against efforts by regulators to explore
where the sector poses systemic risks.
"I have been a little bit surprised because I think it is a
bit of an over reaction to certainly the public statements that
we made," said Under Secretary for Domestic Finance Mary Miller,
in a briefing with reporters.
Miller's comments are intended to set the tone for a
widely-anticipated public meeting later on Monday that will
explore the activities and potential risks in the asset
management industry. The meeting will feature regulators,
industry executives and academics.
The meeting is being held by the Financial Stability
Oversight Council (FSOC), a panel of regulators chaired by
Treasury Secretary Jack Lew and comprised of the heads of the
top U.S. regulators, including the Federal Reserve and the
Securities and Exchange Commission.
The FSOC is tasked with surveying the landscape for
potential systemic risks. The 2010 Dodd-Frank law empowered it
with tools to address emerging concerns.
It can flag potential problems through published reports,
invoke a "name and shame" power to pressure other regulators to
write rules or designate large firms as "systemic."
The latter tool is the most feared by the industry, because
the designation as a "systemically important financial
institution" imposes tougher rules and oversight by the Fed.
The FSOC is currently said to be weighing whether two large
asset managers - Blackrock and Fidelity - should face
The industry's lobbying against FSOC kicked into high gear
last September, after the FSOC's research arm released a study
which found that certain activities of asset managers such as
the use of leverage and "herding" behaviors could fuel broad
The industry fears the study could lay the foundation for
future designations, a concern the Treasury Department has said
The SEC, the primary regulator for asset managers, had
concerns about the report and issued it for public comment on
its website - an act that has since unleashed a fury from the
industry, Capitol Hill and even some of the SEC's own
Miller, who is heavily engaged in the FSOC's activities,
said she hopes Monday's meeting will help clear the air and set
the record straight about what the council is doing.
"I hope today is an opportunity to clear up a little bit of
that misunderstanding," she said, noting it is "natural" for an
industry to "bristle" a little if people are challenging its
safety and soundness or asking tough questions.
She emphasized that there is "no predetermined outcome" for
what steps the FSOC may take, if any.
That means that designation is an option on the table.
However, she said, it also means that at the end of the day, the
FSOC could "do nothing."
(Reporting by Sarah N. Lynch; editing by Andrew Hay)