The U.S. Treasury Department has already started a rigorous implementation planning process to prepare for when the financial reform legislation is finalized.
Treasury Deputy Secretary Neal Wolin, who spoke this morning at the Securitization Industry and Financial Markets Association’s Regulatory Reform Summit said that this work cannot be done overnight and will take time.
However, the Treasury is, “prepared to move on to the next stage with speed, with a strong sense of purpose, and with a commitment to ensuring that our financial system is both safe and vibrant,” Wolin said.
These remarks were made as the U.S. Senate was getting close to making a final vote on the bill. After Wolin's speech, the Senate finally voted on Thursday afternoon 60 to 39 to approve the financial regulatory bill that was designed to address the causes of the 2008 financial crisis.
Wolin addressed this in his speech. “Later today, the Senate is scheduled to take its final vote,“ he said. “The President looks forward to signing financial reform into law as soon as possible. And we look forward, in the months ahead, to working together to ensure that the United States' financial system and capital markets remain the envy of the world.”
Wolin, in his speech, also enumerated the benefits of regulatory reform. He said that the final bill passed by the House of Representatives is a strong bill that “addresses the core problems that helped produce the financial crisis, laying the foundation for a stronger more stable financial system and aligned to a remarkable degree with the legislative proposal President Obama put forward almost exactly one year ago.”
The bill, according to Wolin, accomplishes a lot of things, including making it possible to identify and manage systemic risk by creating a Financial Stability Oversight Council and imposing considerably stronger prudential standards such as those on risk-based capital. He also noted that the bill establishes a comprehensive regulatory framework for the derivatives markets and creates a Bureau of Consumer Financial Protection, which an independent entity with the Federal Reserve that promotes transparency and consumer choice.
Although not the core focus of the conference, Wolin spoke about the role of Fannie Mae and Freddie Mac.
“As we look ahead, it’s important to make clear we are very focused on the need for reform of the housing finance system,” Wolin said. He added that the Treasury’s objective is to have comprehensive and effective reform, one which “delivers a more stable housing market with more effective regulation, and with less risk borne by the American taxpayer."
He stated that early next year the Treasury will put forward a paper outlining its proposals and recommendations on the GSEs. The agency will undertake this work along with the work of implementing the financial reform bill.
Considering, Wolin said, the broad range of interests in ensuring a strong and stable U.S. housing market, the Treasury “is wide open to ideas, to discussion and to collaboration from all corners.”
“The stakes are high and getting it right will be essential ,” Wolin said. “We aim to have as inclusive a process as we can,” he said.