By Brandon Moseley
Alabama Political Reporter
United States Senator Richard Shelby (R) from Alabama Thursday released a statement about regulators’ attempts to harmonize Wall Street reform with international financial regulations. Sen. Shelby is the ranking Republican on the Committee on Banking, Housing and Urban Affairs.
Senator Shelby said, “Two years ago, when Dodd-Frank was passed, the thought that Dodd-Frank would create any international coordination problems was not on the minds of the Act’s supporters. Rather, we were told that the rest of the world would follow our lead and adopt legislation similar to Dodd-Frank. Of course, this has not happened. To the contrary, foreign regulators and governments have publicly expressed serious concerns about Dodd-Frank. Canada, Germany, Japan, the United Kingdom, as well as the European Union, have all identified profound problems with the implementation of Dodd-Frank. These problems include reducing the liquidity of their government bond markets and the discriminatory treatment of foreign firms.”
Sen. Shelby said, “In addition, many market participants have expressed concerns about the extra-territorial reach of Dodd-Frank. They justifiably fear that they will find themselves caught in a regulatory trap as many Dodd-Frank rules may conflict with theirs.” “Today, nearly all major U.S. financial institutions have operations overseas, and most major foreign financial institutions have operations in the U.S.”
Sen. Shelby said, “The globalization of finance has generally been a positive development. It helps firms raise capital at lower rates and more effectively manage their risks. This in turn helps financial institutions lend more cheaply to businesses and consumers. Yet, the globalization of finance means that regulators need to be mindful of how their regulations interact with the regulations of other countries. Poorly conceived laws or ineffective coordination by regulators can easily undermine the efficiency of the international economic system.”
Sen. Shelby said, “I hope to hear how our regulators are working to address the major discrepancies that exist between U.S. and international derivatives rules, especially with respect to margin and capital requirements.”
Sen. Shelby said, “Also, I also hope to learn today what specific steps regulators have taken to ensure that the FDIC’s new orderly liquidation authority can effectively wind down a large international firm. As we saw with the failure of Lehman and, more recently, MF Global, the collapse of an international financial firm can leave customer assets frozen in several countries, making resolution of a firm substantially more difficult.”
“Hopefully, the next time a major international financial institution fails, regulators will have a far more efficient and effective response than the CFTC’s response to MF Global. Unfortunately, in the nearly two years since the passage of Dodd-Frank, regulators have done little to instill confidence that Dodd-Frank will do anything other than increase the cost of doing business in America,” concluded Sen. Shelby.
Senator Richard Shelby has been a vocal critic of President Barack H. Obama’s controversial financial reform bill, the Dodd–Frank Wall Street Reform and Consumer Protection Act. Republican critics of the bill have vowed to repeal Dodd-Frank.
Senator Shelby was first elected to the U.S. Senate in 1986.
To read Senator Shelby’s remarks in their entirety: