Patomak Global Partners CEO Paul Atkins is a guest on Bloomberg radio “Balance of Power” show and weighs in on recent action by the Financial Stability Oversight Council and the New York Attorney General lawsuit against Exxon.
At its meeting this week, the Financial Stability Oversight Council should abandon its bank oriented approach in favor of an activities-based process for identifying risks to the financial system, write nine former SEC and CFTC Chairmen and Commissioners.
Many on Capitol Hill watch are expecting the action in 2018 to shift to regulators at the Department of Labor, the SEC and the Treasury Department, which oversees the Financial Stability Oversight Council.
"The real play is going to be on the new people coming into the agencies," including the SEC, which has its first full commission since 2015, said Paul Atkins, CEO of Patomak Global Partners, a Washington financial services consultancy. Mr. Atkins, a former SEC commissioner, is optimistic the agency will address market structure issues that should be less partisan. "What's good for investors should be good for markets," he said. On the enforcement side, he expects SEC officials to press for more personal accountability of officials whose companies are prosecuted for investor fraud.
Paul Atkins is the CEO of Patomak Global Partners, a financial services consultancy focusing on strategy, compliance, enforcement and litigation located in Washington D.C. He is also a former commissioner at the Securities and Exchange Commission, appointed by George W. Bush. Atkins spoke with Compliance Reporter about his expectations for potential deregulation during the Trump administration, and hot button issues, such as personal liability, that compliance teams should have top of mind.
The Department of the Treasury recently released a 163-page report on regulation of the asset management and insurance industries (“Treasury Report” or “Report”) pursuant to President Trump’s February Executive Order regarding his “Core Principles” for financial regulation. The Report contains many recommendations that will help undo the damage to economic growth brought about by a deluge of costly financial regulations during the past eight years. Some of the policy reforms endorsed by Treasury, however, do not go far enough, are misguided, or send concerning signals regarding the direction of the forthcoming Treasury report on the Financial Stability Oversight Council (“FSOC”) – a multi-regulator council created by the Dodd-Frank Act (“Dodd-Frank”) – requested by President Trump in April.
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Manley Johnson and Paul Atkins write in a co-authored opinion piece in American Banker's BankThink:
"The Treasury Department recently released a new report endorsing numerous regulatory reforms for U.S. asset managers and insurance companies and is about to release another report next week assessing the Financial Stability Oversight Council, an unaccountable regulatory body created in 2010 by the Dodd-Frank Act.
During the past seven years, FSOC has threatened to use its sweeping powers to subject asset managers and insurers to cumbersome, inappropriate bank-style regulation by the Federal Reserve, whose leadership lobbied for and embraced these nonbank regulatory powers. Treasury’s recent report endorses some policies that will undo the damage of this regulatory framework, but it can do much more. Fortunately, the upcoming Treasury report on FSOC and the pending ascension of a new Fed chair provide perfect opportunities to abandon Dodd-Frank-inspired regulatory hubris and begin improving economic growth and financial access..."
Overall, the Report should give investors, consumers, workers, small businesses, and the financial industry alike reason for optimism. Its recommendations on expanding access to capital, securitization, and regulatory processes, Atkins writes, neatly align with the President’s objectives. The report’s recommendations on derivatives and equity market structure also largely go in the right direction.
Atkins notes, however, that the report’s section on so-called financial market utilities accepts failed regulatory approaches that are antithetical to the Core Principles. He also writes that some of the report’s recommendations related to derivatives and equity market structure are weak or misguided.
Moving forward, Atkins encourages Treasury to embrace needed reforms to financial market policies that conflict with the President’s Core Principles in its future reports on asset management, insurance, the Financial Stability Oversight Council, and OLA. Treasury should announce that it will drop its ongoing appeal of the strong March 2016 MetLife v. FSOC court ruling that limits one of FSOC’s sweeping powers to designate firms “systemically important” – an anti-competitive and costly “too-big-to-fail” label that brings about moral hazard and adds next to nothing to make the financial system more “stable.” Treasury should also endorse Congress’s effort to rein in FSOC’s full suite of designation powers and end taxpayer-funded OLA bailouts.
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Paul Atkins testifies at the hearing, “Examining the Dangers of the FSOC’s Designation Process and its Impact on the U.S. Financial System”