WASHINGTON – Senate Homeland Security and Governmental Affairs Committee Joe Lieberman, ID-Conn., responded to the release Thursday of a Government Accountability Office (GAO) report on the federal financial regulatory structure. The GAO report documents the fragmented nature of the financial regulatory system, with over 200 agencies at the federal and state level overseeing and supervising financial services, and provides additional proof that recent financial developments have rendered the structure obsolete.
“The GAO report provides further evidence that our financial regulatory system is inadequate for today’s financial environment and in dire need of reform,” Lieberman said. “In systematic fashion, the GAO report sheds light on how the fragmented regulatory structure and its failure to adequately police Wall Street has contributed to the current economic crisis. Rather than adding another layer of regulation to the patchwork quilt that already exists, any real reform must reconsider our entire framework for financial governance. I look forward to a full discussion of the GAO report and its findings at hearing of the Senate Homeland Security and Governmental Affairs Committee scheduled for January 21st.”
GAO proposed specific principles for creating a new regulatory system including clearly defined regulatory goals, efficiency, flexibility to respond to market innovations a system-wide focus on monitoring and managing risks, and elimination of overlapping regulatory missions.
The reformed system should provide consistent consumer and investor protection through useful information, legal protections, disclosures, and suitability requirements, according to the GAO report. Regulators should be assured independence, prominence, and authority while being held accountable, and financial oversight should be consistent for similar institutions, products, risks, and services.
The report can be found here.