Need To Close the Gaps In Resolution Regimes

By Kayleigh Harvey – Talk Radio News Service

“From the outset I have argued that our financial system is not merely in need of ‘reform,’ but of ‘modernization,’” said Senator Christopher Dodd (D-Conn.), Chairman of the Senate Banking, Housing and Urban Affairs Committee.

At the hearing, which discussed “Enhancing Investor Protection and the Regulation of Securities Markets,” Senator Dodd asked the Chairman of the SEC Mary Schapiro, “Were you consulted by the Treasury and the Fed? What role do you think the SEC should play in this resolution mechanism, given the oversight and regulatory responsibilities?”

Senator Dodd also asked Ms. Schapiro to “comment on the reports of the regulatory changes that Secretary Geithner has mentioned this morning.”

Ms. Schapiro responded, “generally there was consultation.”

Ms Schapiro added, “We clearly have gaps in our resolution regime for large financial institutions….I fully support the concept of closing the gap in resolution regime so that we have a more coherent approach.”

Senator Chuck Schumer (D-N.Y.) said, “We all believe people should be rewarded for good performance, that’s not the problem, but what we’ve seen in many instances that has enraged Americans is a heads-eye wind tail you lose system. In which executives are rewarded for flashing the pan short term gains, or even worse, rewarded richly when the company does poorly and the shareholders have been hammered.”