Washington, DC – Congressman Robert Hurt (R-Virginia) today delivered the following opening statement during the House Committee on Financial Services' Capital Markets and Government Sponsored Enterprises Subcommittee hearing entitled, "Examining the SEC's Money Market Fund Rule Proposal":
[Watch Robert's opening statement by clicking above or HERE]
"Mr. Chairman, thank you for holding today's Subcommittee hearing to examine the Securities and Exchange Commission's (SEC) proposed reforms for money market mutual funds.
"While I know our panel will provide their views on the SEC's current proposal, my concerns also extend to the process by which we came to this proposed rule. After former SEC Chair Schapiro was unable to pass her money market fund proposal through the SEC, the Financial Stability Oversight Council (FSOC) inserted itself into the rulemaking process by proposing its own guidelines pursuant to its authority granted under Dodd-Frank.
"This action by the FSOC raises concerns for the development of financial regulation in the future and carries significant consequences for government and industry. Congress entrusts financial regulatory responsibilities to specific regulatory bodies with specific areas of expertise and jurisdiction. Here, the SEC has overseen the regulation of money market funds for decades, and it understands the product best. Presumably Congress did not establish FSOC's authority under Section 120 as a means for a new regulatory body to undermine the decisions of its specialized independent regulatory agencies.
"Additionally, as a commission dominated by political appointees, FSOC, armed with this authority, has the ability to pressure regulators whose actions do not align with the current Administration's views. FSOC remains outside of the congressional appropriations process, further allowing for this potential politicizing of financial regulation outside of appropriate congressional accountability.
"Finally, the FSOC in proposing its money market fund rules did not establish guidelines for future uses of their enhanced authority, thereby leaving the door open to the possibility of numerous encroachments into the regulatory purview of other financial regulatory agencies.
"Ultimately, independent agencies with five members must be allowed to work their will. The FSOC's authority leaves the offending regulatory body, in this case the SEC, with the choice of yielding or being forced to implement a final rulemaking designated by FSOC on any topic, let alone money market funds. Either option lessens the effectiveness of regulatory agencies that are directly accountable to Congress and ultimately to the American people.
"I'd like to thank our distinguished witnesses for appearing before the subcommittee today, and I look forward to their testimony. Thank you, Mr. Chairman. I yield back the balance of my time."