| WASHINGTON, April 2
WASHINGTON, April 2 Criticism is rising within
the U.S. Securities and Exchange Commission over the structure
of a new regulatory body that assesses risk in the financial
markets, with some commissioners saying they are being
wrongfully excluded from the group's critical decision-making
SEC Commissioner Luis Aguilar, a Democrat, on Wednesday
became the latest agency member to speak out against the way the
Financial Stability Oversight Council is run, saying the
council's closed-door approach to regulation threatens to
undermine its mission.
The FSOC was created by the 2010 Dodd-Frank Wall Street
reform law to keep an eye on emerging systemic risks.
It comprises the heads of all the top regulatory agencies
including the chair of the Federal Reserve, and is chaired by
Treasury Secretary Jack Lew. The group can impose additional
regulations on large financial firms that could destabilize the
economy if they failed.
As chair of the SEC, Mary Jo White also serves as the member
who represents the interests of the SEC on the FSOC.
Each member regularly attends closed-door sessions to
discuss regulatory matters. Staffers from all of the FSOC-member
regulatory agencies who are tapped as "deputies" of the council
also meet separately.
But the law does not consider the SEC's other four
commissioners to be FSOC members, so they do not participate in
"There needs to be a mechanism by which the full Commission,
not just the Chair and SEC staff, provide meaningful input and
coordinate with the leadership of FSOC," Aguilar said in a
speech in Washington at a conference hosted by the Mutual Fund
"The work of FSOC...to identify and mitigate systemic risk
is important. However, there is real danger in that work being
compromised if the full five-member Commission is cut out of the
A Treasury spokesperson said the council defers to the
agencies to determine who attends top-level meetings, which
generally include the principal and one guest from each agency.
"For deputies meetings, we try to keep it to two attendees
per agency to allow for a more productive conversation," the
spokesperson said in an email.
Other FSOC member agencies, including the Commodity Futures
Trading Commission, also have multiple commissioners who do not
attend FSOC meetings.
Aguilar is the third SEC commissioner to voice concerns
about FSOC's governance and structure. His Republican colleagues
- Daniel Gallagher and Michael Piwowar - have voiced similar
In a speech earlier this year, Piwowar complained that his
requests to attend FSOC meetings were denied. He said he was
told that if the SEC were allowed to bring more guests, then
every other FSOC member agency would ask to do the same.
He also lamented that the Federal Reserve gets special
treatment because its chair frequently attends council meetings
along with two other Fed officials - Fed Governor Daniel Tarullo
and New York Federal Reserve President William Dudley.
An SEC spokesman did not immediately respond to a request
for comment about the commissioners' concerns.
The SEC's interest in FSOC matters is particularly pressing
now because the council has been considering whether firms
typically overseen by securities regulators should face
The FSOC already has prodded the SEC to consider additional
reforms for money market funds and is also mulling whether large
asset managers such as Blackrock or Fidelity should be
designated as "systemic" and face additional regulations.
Last year the U.S. Treasury released a controversial study,
which could lay the groundwork for possible designation of asset
managers but has since been panned by the industry and U.S.
lawmakers who claim it is riddled with errors.
In May, the FSOC plans to hold a public event featuring
panel discussions about the asset management industry to help
inform its next steps.
(Editing by Alden Bentley)