The Shadow Financial Regulatory Committee (SFRC), an independent group of experts sponsored by AEI, released its latest findings at a press luncheon on Monday. Robert Eisenbeis of Cumberland Advisors began by presenting the first of three statements published by the committee, which advised US regulators to abandon the Basel III regulations on bank-capital adequacy and liquidity and instead enact superior regulation and enforcement strategies.
Edward Kane of Boston College then presented five SFRC recommendations for President Obama to improve the inadequate financial regulations enacted through the Dodd-Frank Act. He addressed the increase in moral hazard caused by the act and encouraged the administration to enforce regulations that respond to changes in dynamic markets, work with Congress to end the conservatorship of Fannie Mae and Freddie Mac, formulate clear rules that assign accountability to tax and transfer payments produced by bailouts, and circumscribe access to bailouts to protect taxpayers.
Finally, AEI's Peter Wallison discussed recent suggestions for reinstating provisions of the Glass-Steagall Act. Wallison stressed that the critical investment banks that became insolvent during the Great Recession were not affiliated with insured commercial banks, and therefore banking-activity limits outlined in the Glass-Steagall Act would not have prevented the financial crisis. He concluded that the Glass-Steagall Act should not be reinstated, and the Volcker Rule's banking activity limits would not enhance financial stability.
The Shadow Financial Regulatory Committee (SFRC) is a group of publicly recognized independent experts on the financial services industry — including experts in banking, insurance, and securities — who meet regularly to study and critique regulatory policies affecting this sector of the economy.
During closed sessions before the luncheon, committee members will discuss a variety of current financial-regulation issues: an open letter to the new presidential administration regarding financial issues moving forward into 2013, Basel III implementation, the Volcker rule, government-sponsored enterprises, the lifting of guarantees on noninterest-bearing transaction accounts, money market mutual funds, and Securities and Exchange Commission disclosure issues. In a briefing following the sessions, SFRC members will present the adopted policy statements and answer related questions.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.