FDIC Properly Estimating Costs of Dodd-Frank Rules, Agency Watchdog Says

The Federal Deposit Insurance Corp. is properly estimating the costs of new capital and derivatives regulations required under the Dodd-Frank Act, according to the agency’s internal watchdog.

“We found that the FDIC assigned highly qualified subject matter experts to develop the technical aspects of the proposed rules and to conduct economic analysis, where appropriate,” the FDIC inspector general said in a report requested by Republicans on the Senate Banking Committee.

The report reviewed the agency’s proposed rules for capital and margin requirements in swap transactions, retention of risk in securities and broader capital standards.

Senate Republicans have sought reviews by inspectors general for five agencies, questioning whether regulators are properly estimating the economic impact of Dodd-Frank rules.

In an April 15 report, the inspector general of the Commodity Futures Trading Commission said the regulator has relied mainly on lawyers instead of agency economists to produce “one-size-fits-all” cost estimates of swaps regulations. That review was requested by Representative Frank D. Lucas, an Oklahoma Republican and chairman of the House Agriculture Committee, and Representative Michael Conaway, a Texas Republican.

Companies including CME Group Inc. have said the CFTC, which oversees most of the swaps market, hasn’t adequately estimated the costs of the new derivatives rules.

To contact the reporter on this story: Silla Brush in Washington at sbrush@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net

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