JOHNSON STATEMENT ON FINANCIAL STABILITY HEARING

WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing on the Financial Stability Oversight Council’s Annual Report to Congress.

 

“Today we welcome Treasury Secretary Jack Lew to the Committee for the first time since he was confirmed. 

 

“While this Committee lacks jurisdiction over the IRS, I must personally express my sincere disappointment and anger regarding the recent revelation that some IRS employees were targeting political organizations.  Democrats and Republicans agree that politics has no place at the IRS, and I commend Secretary Lew and President Obama for taking swift action last week.  As should be the case, the DOJ is looking into whether any laws have been broken and the appropriate Senate Committees of jurisdiction are holding hearings so we can get to the bottom of this. 

 

“With that said, this Committee has the duty to oversee efforts to strengthen U.S. financial stability, especially in light of the costly crisis our economy continues to recover from.  So today, Secretary Lew will focus on the Financial Stability Oversight Council’s Annual Report to Congress, as required by the Wall Street Reform Act.  

 

“I am pleased that this year’s FSOC report notes progress in key areas that this Committee has devoted attention to over the last year, including money market funds, the tri-party repo market, the housing market, LIBOR and the economic situation in Europe.  The report also highlights emerging operational risks for financial companies like cyber security attacks, new technologies in the equity markets, and financial services’ preparedness for natural disasters.  Furthermore, the FSOC has made important recommendations in many of these areas to further safeguard our economy that should be considered. 

 

“All indicators point to a well-coordinated FSOC, and I will note that since the last report, the Senate has confirmed the first Director of the Office of Financial Research, a key position and office that is assisting FSOC with critical research and analysis.

 

“But more needs to be done to improve our nation’s financial stability, and some high priority rules await completion by prudential regulators.  These include enhanced prudential standards for large, systemic firms required by Wall Street Reform, the Basel III agreements, and the Volcker Rule.  FSOC itself also continues to work on the nonbank SIFI designations.  We also expect additional reforms and action from the regulators on money market funds, the tri-party repo market, and other proposals to curtail systemic risk and ensure no firm is ‘too big to fail.’

 

“While it is always important to get the rules right, the three year anniversary of Wall Street Reform becoming law, and the five year anniversary of the financial crisis, are fast approaching.  The remaining pieces of Wall Street Reform must be finalized soon so that Congress can appropriately assess whether it is necessary to do more. 

 

“Mr. Secretary, I look forward to hearing your testimony and learning what specific steps you are taking as FSOC’s Chair to strengthen financial stability and seeing to it that key Wall Street Reform rules are completed in the next few months, not the next few years.

 

“With that, I turn to Ranking Member Crapo for his opening statement.”

 

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