(Updates with more background)
By Sarah N. Lynch
WASHINGTON, July 15 A Republican member of the
U.S. Securities and Exchange Commission slammed the Federal
Reserve and a council of financial regulators on Tuesday,
accusing them of a power grab on everything from asset managers
to high-speed trading.
SEC Commissioner Michael Piwowar vowed to defend his
agency's turf against the Financial Stability Oversight Council
(FSOC), a panel of regulators created by the Dodd-Frank law to
police emerging market risks.
"With the council's steady march, led by its self-appointed
'alpha dog' - the Fed - into areas that are solely within the
SEC's jurisdiction, I am concerned that our mission to protect
investors, maintain fair, orderly, and efficient markets, and
promote capital formation is being compromised," Piwowar said in
a speech before the conservative-leaning American Enterprise
The FSOC is a council of regulators chaired by Treasury
Secretary Jack Lew and made up of the heads of all the major
regulators, including Fed Chair Janet Yellen and SEC Chair Mary
Piwowar is not a member of the FSOC by law. He has
repeatedly complained that he has been denied access to closed
door FSOC meetings, even though other Federal Reserve officials
who are also not FSOC members such as Fed Governor Daniel
Tarullo have been able to attend.
A Treasury spokeswoman previously said the council defers to
each member on who gets to come to top-level, closed-door
meetings. FSOC members typically bring one staffer, but can
bring more if requested.
Piwowar on Tuesday came up with several choice nicknames for
the FSOC in his speech, including "The Firing Squad on
Capitalism," "The Vast Left Wing Conspiracy To Hinder Capital
Formation" and the "Unaccountable Capital Markets Death Panel."
"I am resolved to defend our jurisdiction," he added.
Spokeswomen for the Treasury and Fed declined to comment on
his remarks, but in June testimony before a U.S. House of
Representatives panel, Lew defended the work of the FSOC and
bashed critics who raised questions about its activities.
"If we avoid or are discouraged from asking questions
altogether, our financial system will be more exposed to unseen
risks," he said.
He also said that people who claim the panel's operations
are opaque are "simply wrong."
Piwowar has always been critical of the Fed and the FSOC.
But his latest comments were arguably his strongest to date as
discontent between the Fed and some SEC officials has grown in
Historically, the Federal Reserve and the SEC have always
had some tension because of very different approaches to
That tension has grown since the passage of Dodd-Frank and
the creation of the FSOC, a move that gave the Fed a greater
role in systemic risk regulation.
The FSOC has the power to designate large financial firms as
systemic, a tag that imposes more regulation and oversight by
It has already used the new power to designate large
financial companies, including American International Group Inc
, GE Capital and Prudential Financial Inc.
The council has ruffled feathers among some SEC
commissioners because of its governance structure, and because
it has been eyeing areas that fall under the SEC's jurisdiction.
It is currently weighing whether the activities of large
asset managers, which are regulated by the SEC, also pose risks
to financial stability. It sought to pressure the SEC to adopt
reforms for money market funds. And in prior written reports,
the FSOC has cited other areas in the financial system that
could pose risks, such as securities lending by brokerages and
Piwowar is not alone at the SEC in his views about FSOC. Two
of his fellow commissioners have expressed concerns, saying they
feel the agency's opinions are shut out on crucial policy
matters and that the Fed has outsized influence.
Critics, including Piwowar, have also said the council lacks
transparency in how it makes decisions about designations.
(Reporting by Sarah N. Lynch; Editing by Tom Brown and Andre