U.S. lawmakers could harm the financial system if they fail to give regulators money and power to implement the Dodd-Frank Act, Federal Deposit Insurance Corp. Chairman Sheila Bair said in testimony for a Senate hearing.
“The work they have ahead of them is considerable,” Bair said today in remarks prepared for the Senate Banking Committee. “Without proper funding and, where needed, the confirmation of qualified leadership, the result could be needless uncertainty about the regulatory environment and failure to instill confidence in our financial markets and institutions.”
In her last scheduled appearance on Capitol Hill before stepping down as FDIC Chairman July 8, Bair called on lawmakers to support agencies writing rules for financial products ranging from complex derivatives traded by the world’s biggest banks to the fees charged to retailers when consumers use debit cards.
Implementing rules for the wind-down of systemically important financial institutions and strengthening bank capital and liquidity requirements are the FDIC’s highest regulatory priorities, Bair said in her prepared remarks. She challenged those who have questioned the agency’s authority under Dodd- Frank to require more disclosure from firms deemed too-big-to- fail, as part of its new resolution authority.
“I believe the skeptics underestimate the benefits of having so much more information about these institutions in advance, as well as the authority to require, if necessary, organizational changes that better align business lines and legal entities before a crisis occurs,” she said.
Bair also called for more action to right the real estate market, and urged supervisory agencies to continue scrutinizing large mortgage servicers who reached a settlement with banking agencies after they acknowledged mishandling home foreclosures.
“The enforcement orders do not preclude additional supervisory actions or the imposition of civil money penalties,” she said.
Bair will step down after serving as FDIC chairman for five years. Martin Gruenberg, the agency’s vice-chairman, has been nominated by President Barack Obama as Bair’s successor. He will serve as acting chairman pending Senate confirmation.
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