The Government Accountability Office released a report that provides a framework for reforming the U.S. financial regulatory system. A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System was drafted with input from 29 agencies and other organizations, including federal and state financial regulatory agencies, consumer advocacy groups and financial services industry trade associations.
The introduction to the report cites several major changes in financial markets that have highlighted gaps in the existing regulatory system, including:
- The failure of regulators to mitigate systemic risks by large and interconnected financial conglomerates.
- The inability to address problems caused by large and sometime less-regulated entities such as nonbank mortgage lenders, hedge funds and creditrating agencies.
- The increasing prevalence of new, more complex investment products, in particular the increasingly complex mortgage and retail credit products that have particularly vexed consumers.
- The growing challenges to accounting and financial regulators to respond to market developments, including the pending global convergence of accounting and auditing standards.
The report sets out a framework for Congress to shape regulatory reforms. The complete report is available at www.gao.gov/new.items/d09310t.pdf.
Mary L. Schapiro was sworn in Jan. 27 as the 29th chairman of the SEC. Schapiro was appointed by President Obama on Jan. 20 and unanimously confirmed by the Senate. She is the first woman to serve as the agency’s permanent chairman.
Schapiro previously served as a commissioner at the SEC from December 1988 to October 1994. She was appointed by President Reagan, reappointed by President George H.W. Bush in 1989, and named acting chairman by President Clinton in 1993. She left the SEC when President Clinton appointed her chairman of the Commodity Futures Trading Commission, where she served until 1996. Immediately prior to her current SEC appointment, Schapiro was CEO of the Financial Industry Regulatory Authority.