JOHNSON STATEMENT ON FINANCIAL MARKETS OVERSIGHT HEARING

WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing titled “Mitigating Systemic Risk in Financial Markets through Wall Street Reforms.” The Committee heard from SEC Chair Mary Jo White, and CFTC Chairman Gary Gensler.

“Good morning.  I call this hearing to order.

 

“Today we welcome Chair White and Chairman Gensler to update the Committee on important work underway at the SEC and CFTC to implement the Wall Street Reform Act and reduce systemic risk in our financial markets.  We look forward to hearing about the progress being made to better oversee the derivatives market, finalize the Volcker Rule, and implement changes to money market funds and credit rating agencies, among other reforms.

 

“On derivatives, the SEC and CFTC should be proud of the progress made to date.  Important rules governing clearing and swap data reporting have taken effect, with the majority of other rules slated to be completed and take effect in the months ahead.  Also, due in no small part to the work of both agencies, the U.S. has provided the template for how other nations should regulate derivatives. This large, global market demands strong, coordinated regulations to help improve financial stability, and I commend the recent CFTC agreement with the EU Commission to establish a framework that relies on strong cooperation between our two jurisdictions.  And as you work to harmonize international swap regulations, the SEC and CFTC should continue to harmonize your separate rules in a way that avoids market disruption or fragmentation.  

 

“On other reforms, the SEC has made progress to address areas of systemic risk by proposing rules to implement money market fund reform.  The proposed rules follow earlier reform measures taken by the SEC, and I hope the considerable work that has been done in this area will result in a more stable framework for the money market fund market. 

 

“We also look forward to hearing more about the SEC’s efforts to address flaws in the operation and use of credit ratings that were exposed by the financial crisis.  As required by the Wall Street Reform Act, there has been extensive examination of this issue, and I look forward to improvements in the credit rating process.

 

“Last, actions that improve investor protection will restore confidence in financial markets and bolster financial stability.  To that end, I want to encourage the SEC and CFTC to continue to use every tool Congress gave them to stop fraud and protect investors.  That is also why I believe the SEC should move forward with adding sensible safeguards in the private placement market.”