THE PRESIDENT: Good morning, everybody. I want to speak about the ongoing and increasingly urgent efforts to avoid default and reduce our deficit.
Right now, the House of Representatives is still trying to pass a bill that a majority of Republicans and Democrats in the Senate have already said they won’t vote for. It’s a plan that would force us to re-live this crisis in just a few short months, holding our economy captive to Washington politics once again. In other words, it does not solve the problem, and it has no chance of becoming law.
What’s clear now is that any solution to avoid default must be bipartisan. It must have the support of both parties that were sent here to represent the American people -– not just one faction. It will have to have the support of both the House and the Senate. And there are multiple ways to resolve this problem. Senator Reid, a Democrat, has introduced a plan in the Senate that contains cuts agreed upon by both parties.
Senator McConnell, a Republican, offered a solution that could get us through this. There are plenty of modifications we can make to either of these plans in order to get them passed through both the House and the Senate and would allow me to sign them into law. And today I urge Democrats and Republicans in the Senate to find common ground on a plan that can get support -- that can get support from both parties in the House –- a plan that I can sign by Tuesday.
Now, keep in mind, this is not a situation where the two parties are miles apart. We’re in rough agreement about how much spending can be cut responsibly as a first step toward reducing our deficit. We agree on a process where the next step is a debate in the coming months on tax reform and entitlement reform –- and I’m ready and willing to have that debate. And if we need to put in place some kind of enforcement mechanism to hold us all accountable for making these reforms, I’ll support that too if it’s done in a smart and balanced way.
So there are plenty of ways out of this mess. But we are almost out of time. We need to reach a compromise by Tuesday so that our country will have the ability to pay its bills on time, as we always have -- bills that include monthly Social Security checks, veterans’ benefits and the government contracts we’ve signed with thousands of businesses. Keep in mind, if we don’t do that, if we don’t come to an agreement, we could lose our country’s AAA credit rating, not because we didn’t have the capacity to pay our bills -- we do -- but because we didn’t have a AAA political system to match our AAA credit rating.
And make no mistake -– for those who say they oppose tax increases on anyone, a lower credit rating would result potentially in a tax increase on everyone in the form of higher interest rates on their mortgages, their car loans, their credit cards. And that’s inexcusable.
There are a lot of crises in the world that we can’t always predict or avoid -– hurricanes, earthquakes, tornadoes, terrorist attacks. This isn’t one of those crises. The power to solve this is in our hands. And on a day when we’ve been reminded how fragile the economy already is, this is one burden we can lift ourselves. We can end it with a simple vote –- a vote that Democrats and Republicans have been taking for decades, a vote that the leaders in Congress have taken for decades.
It’s not a vote that allows Congress to spend more money. Raising the debt ceiling simply gives our country the ability to pay the bills that Congress has already racked up. I want to emphasize that. The debt ceiling does not determine how much more money we can spend, it simply authorizes us to pay the bills we already have racked up. It gives the United States of America the ability to keep its word.
Now, on Monday night, I asked the American people to make their voice heard in this debate, and the response was overwhelming. So please, to all the American people, keep it up. If you want to see a bipartisan compromise -– a bill that can pass both houses of Congress and that I can sign -- let your members of Congress know. Make a phone call. Send an email. Tweet. Keep the pressure on Washington, and we can get past this.
And for my part, our administration will be continuing to work with Democrats and Republicans all weekend long until we find a solution. The time for putting party first is over. The time for compromise on behalf of the American people is now. And I am confident that we can solve this problem. I’m confident that we will solve this problem. For all the intrigue and all the drama that’s taking place on Capitol Hill right now, I’m confident that common sense and cooler heads will prevail.
But as I said earlier, we are now running out of time. It’s important for everybody to step up and show the leadership that the American people expect.
Thank you.
END
10:42 A.M. EDT
Tampilkan postingan dengan label barack obama. Tampilkan semua postingan
Tampilkan postingan dengan label barack obama. Tampilkan semua postingan
Jumat, 29 Juli 2011
Rabu, 17 November 2010
U.S. Treasury Deputy Secretary Neal Wolin Remarks to the London Stock Exchange “A New Financial Framework: Dodd-Frank’s Contribution to Global Reform”
November 17, 2010
TG-957
Deputy Secretary Neal Wolin
Remarks to the London Stock Exchange
“A New Financial Framework: Dodd-Frank’s
Contribution to Global Reform”
Remarks as Prepared for Delivery
Thank you for the opportunity to be here today and to speak about the critical topic of financial regulatory reform.
Two years ago, the global economy was deep in crisis.
In the United States, our financial system stood on the verge of collapse, not because of one gap or breakdown in our system, but because of many.
Firms took on risks they did not fully understand.
In Washington, regulators did not make full use of the authority they had to protect consumers and limit excessive risk.
Loopholes allowed large parts of the financial industry to operate without oversight, transparency, or restraint.
Policymakers were too slow to fix a broken system.
Around the world, other countries faced similar predicaments. And given the inter-connectedness of the global financial system, soon the entire global economy was at risk in ways we had never before experienced.
Over the past two years the global community has worked together to restore stability and growth. But from the start we also knew – in the United States and around the world – that we had an obligation to fix the flaws in our financial systems that had helped trigger this crisis.
In July, when President Obama signed into law the Dodd-Frank Act -- the most significant financial reforms since the 1930s – the United States took a tremendous step forward.
The Act builds a stronger financial system by addressing major gaps and weaknesses in regulation. It puts in place buffers and safeguards to reduce the chance that another generation will go through a crisis of similar magnitude. It protects taxpayers from bailouts. It brings fairness and transparency to consumers of financial services. And it lays the foundation for a financial system that is pro-investment and pro-growth.
Today, I would like to highlight some of the most important elements of our new framework, share our progress so far in implementing that framework, and set our work in the context of the broader global effort at financial regulatory reform.
We are hard at work on the construction of a system that is more robust, more transparent and more resilient.
First the Dodd-Frank Act creates a framework and provides new tools to identify and manage systemic risk in a way that we could not do before.
Before the Dodd-Frank Act, there was no single government entity charged with monitoring and responding to risk across the financial system. Gaps and inconsistencies led to regulatory arbitrage, and some of the largest, most interconnected firms were able to escape meaningful supervision.
The new law creates the Financial Stability Oversight Council, chaired by the Secretary of the Treasury, and composed of the heads of the financial regulatory agencies. The Council is charged with identifying risks to financial stability, responding to any emerging threats in the system and promoting market discipline. The Act also provides the Council with the responsibility to decide which nonbank financial institutions and financial market utilities will be designated as systemically important and to recommend what heightened prudential standards should be applied to those firms – with a view not only to the safety of specific institutions, but, critically, to the stability of the entire system.
In order to constrain systemic risk effectively, the Council and its members must be able to monitor systemic risk effectively. Doing that requires improvements in financial reporting and analytical capacity in the regulatory community.
That is why, alongside establishing the Council, the Dodd-Frank Act also established the Office of Financial Research.
The OFR was created to address the critical need of regulators, policymakers, and industry for data that are more standardized, more useful, and more reliable. The OFR's capacity to organize and analyze data will help the Council make more informed decisions about potential threats to the financial system.
Given the global nature of this crisis, it is no surprise that this ability to look beyond the safety of individual firms or markets to the health of the broader financial system is one of the key areas of reform called for by the international regulatory community. At the London Summit in April 2009, the G-20 Leaders agreed that their authorities should be able to identify and take account of macro-prudential risks across the financial system to limit the build-up of systemic risk. Last week, the G-20 Leaders called on the Financial Stability Board, the IMF and the Bank for International Settlements to further develop frameworks for a new set of policy tools in this area.
Second, the Act requires that regulators impose substantially stronger prudential standards.
Risk-based capital, leverage, and liquidity standards will be tougher for all firms, providing a more reliable buffer against both firm-specific failures and systemic shocks. And firms that are bigger and more complex will have to hold more capital than smaller and less complex firms, requiring them to internalize risks they impose on the system by virtue of their size and complexity.
The Dodd-Frank Act imposes a new mandatory stress-testing regime on the largest bank holding companies and designated non-bank firms. It requires them to establish "living wills," laying out a credible plan for breakup and wind-down in the event of severe financial distress. Regulators are now able to require all financial firms, including holding companies, to take swift action to remedy declines in capital levels and other critical measures of financial health. And, as the Volcker Rule requires, there will be restrictions on certain risky activities by banks, such as investing in hedge funds and proprietary trading, as well as on the excessive growth by acquisition of the very largest financial firms.
We are also seeing movement on stronger prudential standards in the international community. Inadequate capital was at the core of the crisis, and we strongly support the work done by the Basel Committee to improve the quality and quantity of capital, impose a leverage ratio, and develop tougher liquidity standards. We are committed to continue our implementation of Basel II, apply the tougher capital requirements on banks' trading books known as Basel 2.5, and implement the new, tougher Basel III standards on time.
We also welcome the work done by the Financial Stability Board to strengthen the intensity of supervision of the systemically important financial institutions – something the Dodd-Frank Act also requires us to do.
Third, the Act establishes a comprehensive regulatory framework for the derivatives markets – the source of so much risk and uncertainty in the recent crisis.
Standardized derivatives will be centrally cleared and all derivatives will be reported to trade repositories. Standardized over-the-counter derivatives will also be traded on exchanges or electronic trading platforms to increase transparency and efficiency of these markets.
Regulators will impose strong prudential standards, including capital and margin requirements, and strong business conduct standards on over-the-counter derivative dealers and all other major OTC market participants. And the SEC and CFTC now have full enforcement authority – to monitor markets, set position limits and take action against manipulation and abuse. Through a narrowly tailored end-user exemption, the Act ensures that commercial firms will be able to hedge their risks effectively and efficiently.
Derivatives should reduce risk, not magnify it. They should be a force for stability, not contagion. By bringing the derivatives markets out of the shadows, the new law benefits every business that uses derivatives to manage real risks.
These are global markets that should have open, transparent, and prudentially sound infrastructure supporting them. That is why the G-20 committed to this and our regulators are working through CPSS and IOSCO to make sure we all agree to robust prudential and information sharing requirements. We commend the European Commission's proposals on central clearing. We look forward to continued collaboration on their future work on derivatives trading and market abuse--ensuring that we have open, transparent and non-discriminatory regimes, without geographic mandates, on both sides of the Atlantic.
The fourth key element of the Dodd-Frank Act is putting an end to the problem of "Too Big to Fail" in the United States. The Act gives the U.S. government the authority to shut down and break apart large non-bank financial firms whose imminent failure might threaten the broader system. Modelled on pre-existing authority to wind down failed banks, this resolution authority closes a gap with respect to non-bank financial firms that severely limited the federal government's options during the crisis, for example with AIG or Lehman.
It allows the U.S. government to wind down a failing financial firm wiping out shareholders, firing culpable management, and allowing creditors to take losses while stabilizing the financial system.
Any losses that cannot be covered through sales of the firm's assets will be recouped from the largest financial institutions through an ex-post assessment.
As a result, no firm will be insulated from the consequences of its actions. No firm will be protected from failure. No firm will benefit from the perception that taxpayers will be there to break their fall. The Act makes absolutely clear that taxpayers will never be asked to bear the costs of a financial firm's failure.
We strongly believe that other countries need to develop the types of tools we have long had for orderly resolution for banks– and now non-banks. Last week, G-20 Leaders reaffirmed their committed to implement national resolution systems with the powers and tools to ensure that all financial institutions can be resolved safely, quickly and without destabilizing the financial system or exposing the taxpayers to the risk of loss. These national systems are essential if regulators are to develop effective cross-border resolution plans.
Fifth, the Act enhances the federal government's ability to monitor the insurance sector and coordinate and develop federal policy on major domestic and international insurance issues. The crisis highlighted the lack of expertise within our federal government regarding the insurance industry. In response, the Act establishes the Federal Insurance Office which will provide the U.S. Government – for the first time -- dedicated expertise regarding the insurance industry.
The Office will monitor for problems or gaps in insurance regulation that can contribute to a systemic crisis in the insurance industry or the financial system; gather data and information on the industry and insurers; and coordinate policy in the insurance sector.
The Act does not provide the Federal Insurance Office with general supervisory or regulatory authority over the business of insurance. The States remain the functional regulators. Through the Office, however, the federal government will work toward modernizing and improving our system of insurance regulation.
With the Office, Treasury is now better able to work with other nations to increase international cooperation on insurance regulation, enhancing our collective efforts in addressing risks posed to the financial system. The Federal Insurance Office is in the process of becoming a member of the International Association of Insurance Supervisors where it will represent the United States. The Secretary of the Treasury, together with the United States Trade Representative, is now empowered to negotiate certain international agreements regarding prudential insurance measures and the Office will assist the Secretary. We anticipate that the Federal Insurance Office will be actively involved, for example, in working with the representatives of other countries on reinsurance collateral and U.S. equivalence under Solvency II.
Sixth, the Act establishes a single agency dedicated to consumer financial protection.
The Bureau of Consumer Financial Protection, is an independent entity within the Federal Reserve, with a clear mission: to promote transparency and consumer choice, and to prevent abusive and deceptive practices.
The CFPB will consolidate seven agencies' existing functions for supervising the largest banking institutions for compliance with consumer financial protection laws.
And it will supervise the consumer financial services activities of many non-bank financial firms that sell consumer financial services – an entirely new federal function.
This is an area that hasn't received a lot of international attention to date. However, just this past weekend, the G-20 leaders agreed to ask the FSB, the OECD, and others to explore options for advancing consumer financial protection through informed choice that includes disclosure, transparency, and education and protection from fraud and abuse. We look forward to working with them.
Now, the Act does much more. But each of these is a critical element: a focus on systemic risk; heightened prudential standards; comprehensive regulation of derivatives; an end to "too big to fail;" the creation of a Federal Insurance Office; and robust consumer protection.
Enactment of the legislation was, of course, not the end of the financial reform effort. We have now begun the difficult and complex process of implementation.
We have made significant progress in the months since enactment. Wherever possible, we are providing clarity to the public and to the markets. We are moving as quickly and as carefully as we can. But the task we face cannot be achieved overnight. We have to write new rules in some of the most complex areas of finance; consolidate authority spread across multiple agencies; set up new institutions for addressing systemic risks and for consumer protection; and negotiate with countries around the world.
We have made important progress creating the new regulatory bodies established under the Act. These institutions are at the heart of the Dodd-Frank Act – the Financial Stability Oversight Council, the Office of Financial Research, and the Consumer Financial Protection Bureau. And I would like to take a few moments to update you on our progress standing them up.
First, the Financial Stability Oversight Council. As Chair, Treasury has moved quickly to convene the Council earlier this month, ahead of the date required by the Act. At this first meeting, Council members engaged on important substantive issues. They requested public input on the criteria the Council should use to designate systemically important nonbank financial companies for Federal Reserve supervision. And they requested public comment on the Council's study on the Volcker Rule's limitations on proprietary trading at certain financial institutions.
More broadly members released an integrated roadmap for implementing the Dodd-Frank Act that reflects the priorities of the various regulatory agencies. And they adopted bylaws and a transparency policy.
On November 23, the Council is scheduled to have its second meeting. I expect that the Council will continue its work on systemic risk and discuss the criteria for designating systemic non-bank financial institutions and financial market utilities. The Council is also making progress standing up its operations, including budget, staffing, and organizational structure.
The Council's success in carrying out these critical functions will depend on its ability to act in a collaborative manner. While each member agency is responsible for a specific part of the financial sector or for certain aspects of its functioning, the Act holds the Council and its members collectively accountable for maintaining stability across the financial system. Accordingly, the Council's approach preserves the independence of regulators to fulfil their individual responsibilities while maximizing the coordination required for the Council to achieve its broader mission of financial stability.
Here in Europe, national governments and the European Union are setting up institutions with similar mandates for monitoring systemic risks. We look forward to cooperating with them in the future, particularly through the Financial Stability Board and the Basel Committee, to share best practices as we develop approaches to macro-prudential supervision.
The second institution Treasury is creating is the Office of Financial Research. The OFR is working with regulators and industry, laying the groundwork to standardize financial reporting and develop reference data that will identify and describe financial contracts and institutions. Data standardization will provide for more consistent and complete reporting, making the data available to decision makers easier to obtain, digest, and utilize.
Over the coming weeks and months, the OFR will begin to define a set of standards for reporting of financial transaction and position data. The OFR will collaborate with the financial industry, data experts, and regulators to develop an approach to standardization that works for everyone.
We are mindful that the OFR must not duplicate existing government data collection efforts or impose unnecessary burdens. That is why we are working with the regulators to catalogue carefully the data they already collect to ensure the OFR relies on their data whenever possible. The OFR is also exploring ways in which it could act as a central warehouse of data for the regulatory community, which could generate efficiencies and interagency cooperation.
For example, new reporting requirements in the Dodd-Frank Act, which are consistent with reforms supported by the G-20, will make possible a comprehensive cataloging of derivatives in order to track their redistribution of risk through the system. Data standards will make it easier for individual firms to assess their own risks and will improve discipline by giving market participants better information on what individual firms are doing.
Beyond establishing standards, the OFR is also required to develop and publish key reference data that will describe financial institutions and contracts. Regulators and supervisors, as well as private firms and investors, rely on such reference data to analyze risk. The OFR is beginning the effort to put all of this in place.
Now the true measure of success will be in how it facilitates more robust and sophisticated analysis of the financial system, both for the government and the private sector. This is critical for our Council as well as its international counterparts. We look forward to identifying and addressing key data gaps.
The third institution is the Consumer Financial Protection Bureau. Treasury has set up an implementation team focused on establishing key functions of the bureau such as research and supervision of bank and non-bank financial institutions, and building the CFPB's supporting infrastructure.
The Secretary has designated July 21, 2011, as the date on which the CFPB will assume existing authorities of seven federal agencies, and we have made substantial progress preparing the CFPB to incorporate staff and assume authorities from those agencies.
Let me conclude by expressing the U.S. government's deep appreciation for the meaningful effort our international friends here and around the world have been making to implement fundamental financial reform.
There is no doubt that the regulatory frameworks that many countries had in place ahead of this crisis simply did not work. They failed to prevent a historic global recession that has cost us all dearly. They must be fixed. And in Washington we have tried to lead by example.
But this is a challenge for all of us to meet. In the wake of the severe, globally synchronized financial crisis, we must develop the most globally convergent financial protections the world has ever attempted. So as we protect against future crisis; and as we promote lasting global growth; we need to act in a coordinated fashion.
That doesn't mean that our strategies will be identical. They shouldn't be. While global convergence is essential in areas such as capital and derivatives regulation, in other areas the reforms we seek may be best served by different nations pursuing different means. A specific implementation approach that works for the United States may not work for the United Kingdom.
But we should never forget that we all have the same goal. We need a level playing field. And by implementing new standards; by ending too big to fail; by enhancing global regulation; and by establishing stronger international coordination to prevent future crises, we will improve the soundness and resilience of the global economy. This is about stability. This is about growth. But most importantly this is about better serving our people, our workers, our entrepreneurs, our businesses and the generations to come.
###
TG-957
Deputy Secretary Neal Wolin
Remarks to the London Stock Exchange
“A New Financial Framework: Dodd-Frank’s
Contribution to Global Reform”
Remarks as Prepared for Delivery
Thank you for the opportunity to be here today and to speak about the critical topic of financial regulatory reform.
Two years ago, the global economy was deep in crisis.
In the United States, our financial system stood on the verge of collapse, not because of one gap or breakdown in our system, but because of many.
Firms took on risks they did not fully understand.
In Washington, regulators did not make full use of the authority they had to protect consumers and limit excessive risk.
Loopholes allowed large parts of the financial industry to operate without oversight, transparency, or restraint.
Policymakers were too slow to fix a broken system.
Around the world, other countries faced similar predicaments. And given the inter-connectedness of the global financial system, soon the entire global economy was at risk in ways we had never before experienced.
Over the past two years the global community has worked together to restore stability and growth. But from the start we also knew – in the United States and around the world – that we had an obligation to fix the flaws in our financial systems that had helped trigger this crisis.
In July, when President Obama signed into law the Dodd-Frank Act -- the most significant financial reforms since the 1930s – the United States took a tremendous step forward.
The Act builds a stronger financial system by addressing major gaps and weaknesses in regulation. It puts in place buffers and safeguards to reduce the chance that another generation will go through a crisis of similar magnitude. It protects taxpayers from bailouts. It brings fairness and transparency to consumers of financial services. And it lays the foundation for a financial system that is pro-investment and pro-growth.
Today, I would like to highlight some of the most important elements of our new framework, share our progress so far in implementing that framework, and set our work in the context of the broader global effort at financial regulatory reform.
We are hard at work on the construction of a system that is more robust, more transparent and more resilient.
First the Dodd-Frank Act creates a framework and provides new tools to identify and manage systemic risk in a way that we could not do before.
Before the Dodd-Frank Act, there was no single government entity charged with monitoring and responding to risk across the financial system. Gaps and inconsistencies led to regulatory arbitrage, and some of the largest, most interconnected firms were able to escape meaningful supervision.
The new law creates the Financial Stability Oversight Council, chaired by the Secretary of the Treasury, and composed of the heads of the financial regulatory agencies. The Council is charged with identifying risks to financial stability, responding to any emerging threats in the system and promoting market discipline. The Act also provides the Council with the responsibility to decide which nonbank financial institutions and financial market utilities will be designated as systemically important and to recommend what heightened prudential standards should be applied to those firms – with a view not only to the safety of specific institutions, but, critically, to the stability of the entire system.
In order to constrain systemic risk effectively, the Council and its members must be able to monitor systemic risk effectively. Doing that requires improvements in financial reporting and analytical capacity in the regulatory community.
That is why, alongside establishing the Council, the Dodd-Frank Act also established the Office of Financial Research.
The OFR was created to address the critical need of regulators, policymakers, and industry for data that are more standardized, more useful, and more reliable. The OFR's capacity to organize and analyze data will help the Council make more informed decisions about potential threats to the financial system.
Given the global nature of this crisis, it is no surprise that this ability to look beyond the safety of individual firms or markets to the health of the broader financial system is one of the key areas of reform called for by the international regulatory community. At the London Summit in April 2009, the G-20 Leaders agreed that their authorities should be able to identify and take account of macro-prudential risks across the financial system to limit the build-up of systemic risk. Last week, the G-20 Leaders called on the Financial Stability Board, the IMF and the Bank for International Settlements to further develop frameworks for a new set of policy tools in this area.
Second, the Act requires that regulators impose substantially stronger prudential standards.
Risk-based capital, leverage, and liquidity standards will be tougher for all firms, providing a more reliable buffer against both firm-specific failures and systemic shocks. And firms that are bigger and more complex will have to hold more capital than smaller and less complex firms, requiring them to internalize risks they impose on the system by virtue of their size and complexity.
The Dodd-Frank Act imposes a new mandatory stress-testing regime on the largest bank holding companies and designated non-bank firms. It requires them to establish "living wills," laying out a credible plan for breakup and wind-down in the event of severe financial distress. Regulators are now able to require all financial firms, including holding companies, to take swift action to remedy declines in capital levels and other critical measures of financial health. And, as the Volcker Rule requires, there will be restrictions on certain risky activities by banks, such as investing in hedge funds and proprietary trading, as well as on the excessive growth by acquisition of the very largest financial firms.
We are also seeing movement on stronger prudential standards in the international community. Inadequate capital was at the core of the crisis, and we strongly support the work done by the Basel Committee to improve the quality and quantity of capital, impose a leverage ratio, and develop tougher liquidity standards. We are committed to continue our implementation of Basel II, apply the tougher capital requirements on banks' trading books known as Basel 2.5, and implement the new, tougher Basel III standards on time.
We also welcome the work done by the Financial Stability Board to strengthen the intensity of supervision of the systemically important financial institutions – something the Dodd-Frank Act also requires us to do.
Third, the Act establishes a comprehensive regulatory framework for the derivatives markets – the source of so much risk and uncertainty in the recent crisis.
Standardized derivatives will be centrally cleared and all derivatives will be reported to trade repositories. Standardized over-the-counter derivatives will also be traded on exchanges or electronic trading platforms to increase transparency and efficiency of these markets.
Regulators will impose strong prudential standards, including capital and margin requirements, and strong business conduct standards on over-the-counter derivative dealers and all other major OTC market participants. And the SEC and CFTC now have full enforcement authority – to monitor markets, set position limits and take action against manipulation and abuse. Through a narrowly tailored end-user exemption, the Act ensures that commercial firms will be able to hedge their risks effectively and efficiently.
Derivatives should reduce risk, not magnify it. They should be a force for stability, not contagion. By bringing the derivatives markets out of the shadows, the new law benefits every business that uses derivatives to manage real risks.
These are global markets that should have open, transparent, and prudentially sound infrastructure supporting them. That is why the G-20 committed to this and our regulators are working through CPSS and IOSCO to make sure we all agree to robust prudential and information sharing requirements. We commend the European Commission's proposals on central clearing. We look forward to continued collaboration on their future work on derivatives trading and market abuse--ensuring that we have open, transparent and non-discriminatory regimes, without geographic mandates, on both sides of the Atlantic.
The fourth key element of the Dodd-Frank Act is putting an end to the problem of "Too Big to Fail" in the United States. The Act gives the U.S. government the authority to shut down and break apart large non-bank financial firms whose imminent failure might threaten the broader system. Modelled on pre-existing authority to wind down failed banks, this resolution authority closes a gap with respect to non-bank financial firms that severely limited the federal government's options during the crisis, for example with AIG or Lehman.
It allows the U.S. government to wind down a failing financial firm wiping out shareholders, firing culpable management, and allowing creditors to take losses while stabilizing the financial system.
Any losses that cannot be covered through sales of the firm's assets will be recouped from the largest financial institutions through an ex-post assessment.
As a result, no firm will be insulated from the consequences of its actions. No firm will be protected from failure. No firm will benefit from the perception that taxpayers will be there to break their fall. The Act makes absolutely clear that taxpayers will never be asked to bear the costs of a financial firm's failure.
We strongly believe that other countries need to develop the types of tools we have long had for orderly resolution for banks– and now non-banks. Last week, G-20 Leaders reaffirmed their committed to implement national resolution systems with the powers and tools to ensure that all financial institutions can be resolved safely, quickly and without destabilizing the financial system or exposing the taxpayers to the risk of loss. These national systems are essential if regulators are to develop effective cross-border resolution plans.
Fifth, the Act enhances the federal government's ability to monitor the insurance sector and coordinate and develop federal policy on major domestic and international insurance issues. The crisis highlighted the lack of expertise within our federal government regarding the insurance industry. In response, the Act establishes the Federal Insurance Office which will provide the U.S. Government – for the first time -- dedicated expertise regarding the insurance industry.
The Office will monitor for problems or gaps in insurance regulation that can contribute to a systemic crisis in the insurance industry or the financial system; gather data and information on the industry and insurers; and coordinate policy in the insurance sector.
The Act does not provide the Federal Insurance Office with general supervisory or regulatory authority over the business of insurance. The States remain the functional regulators. Through the Office, however, the federal government will work toward modernizing and improving our system of insurance regulation.
With the Office, Treasury is now better able to work with other nations to increase international cooperation on insurance regulation, enhancing our collective efforts in addressing risks posed to the financial system. The Federal Insurance Office is in the process of becoming a member of the International Association of Insurance Supervisors where it will represent the United States. The Secretary of the Treasury, together with the United States Trade Representative, is now empowered to negotiate certain international agreements regarding prudential insurance measures and the Office will assist the Secretary. We anticipate that the Federal Insurance Office will be actively involved, for example, in working with the representatives of other countries on reinsurance collateral and U.S. equivalence under Solvency II.
Sixth, the Act establishes a single agency dedicated to consumer financial protection.
The Bureau of Consumer Financial Protection, is an independent entity within the Federal Reserve, with a clear mission: to promote transparency and consumer choice, and to prevent abusive and deceptive practices.
The CFPB will consolidate seven agencies' existing functions for supervising the largest banking institutions for compliance with consumer financial protection laws.
And it will supervise the consumer financial services activities of many non-bank financial firms that sell consumer financial services – an entirely new federal function.
This is an area that hasn't received a lot of international attention to date. However, just this past weekend, the G-20 leaders agreed to ask the FSB, the OECD, and others to explore options for advancing consumer financial protection through informed choice that includes disclosure, transparency, and education and protection from fraud and abuse. We look forward to working with them.
Now, the Act does much more. But each of these is a critical element: a focus on systemic risk; heightened prudential standards; comprehensive regulation of derivatives; an end to "too big to fail;" the creation of a Federal Insurance Office; and robust consumer protection.
Enactment of the legislation was, of course, not the end of the financial reform effort. We have now begun the difficult and complex process of implementation.
We have made significant progress in the months since enactment. Wherever possible, we are providing clarity to the public and to the markets. We are moving as quickly and as carefully as we can. But the task we face cannot be achieved overnight. We have to write new rules in some of the most complex areas of finance; consolidate authority spread across multiple agencies; set up new institutions for addressing systemic risks and for consumer protection; and negotiate with countries around the world.
We have made important progress creating the new regulatory bodies established under the Act. These institutions are at the heart of the Dodd-Frank Act – the Financial Stability Oversight Council, the Office of Financial Research, and the Consumer Financial Protection Bureau. And I would like to take a few moments to update you on our progress standing them up.
First, the Financial Stability Oversight Council. As Chair, Treasury has moved quickly to convene the Council earlier this month, ahead of the date required by the Act. At this first meeting, Council members engaged on important substantive issues. They requested public input on the criteria the Council should use to designate systemically important nonbank financial companies for Federal Reserve supervision. And they requested public comment on the Council's study on the Volcker Rule's limitations on proprietary trading at certain financial institutions.
More broadly members released an integrated roadmap for implementing the Dodd-Frank Act that reflects the priorities of the various regulatory agencies. And they adopted bylaws and a transparency policy.
On November 23, the Council is scheduled to have its second meeting. I expect that the Council will continue its work on systemic risk and discuss the criteria for designating systemic non-bank financial institutions and financial market utilities. The Council is also making progress standing up its operations, including budget, staffing, and organizational structure.
The Council's success in carrying out these critical functions will depend on its ability to act in a collaborative manner. While each member agency is responsible for a specific part of the financial sector or for certain aspects of its functioning, the Act holds the Council and its members collectively accountable for maintaining stability across the financial system. Accordingly, the Council's approach preserves the independence of regulators to fulfil their individual responsibilities while maximizing the coordination required for the Council to achieve its broader mission of financial stability.
Here in Europe, national governments and the European Union are setting up institutions with similar mandates for monitoring systemic risks. We look forward to cooperating with them in the future, particularly through the Financial Stability Board and the Basel Committee, to share best practices as we develop approaches to macro-prudential supervision.
The second institution Treasury is creating is the Office of Financial Research. The OFR is working with regulators and industry, laying the groundwork to standardize financial reporting and develop reference data that will identify and describe financial contracts and institutions. Data standardization will provide for more consistent and complete reporting, making the data available to decision makers easier to obtain, digest, and utilize.
Over the coming weeks and months, the OFR will begin to define a set of standards for reporting of financial transaction and position data. The OFR will collaborate with the financial industry, data experts, and regulators to develop an approach to standardization that works for everyone.
We are mindful that the OFR must not duplicate existing government data collection efforts or impose unnecessary burdens. That is why we are working with the regulators to catalogue carefully the data they already collect to ensure the OFR relies on their data whenever possible. The OFR is also exploring ways in which it could act as a central warehouse of data for the regulatory community, which could generate efficiencies and interagency cooperation.
For example, new reporting requirements in the Dodd-Frank Act, which are consistent with reforms supported by the G-20, will make possible a comprehensive cataloging of derivatives in order to track their redistribution of risk through the system. Data standards will make it easier for individual firms to assess their own risks and will improve discipline by giving market participants better information on what individual firms are doing.
Beyond establishing standards, the OFR is also required to develop and publish key reference data that will describe financial institutions and contracts. Regulators and supervisors, as well as private firms and investors, rely on such reference data to analyze risk. The OFR is beginning the effort to put all of this in place.
Now the true measure of success will be in how it facilitates more robust and sophisticated analysis of the financial system, both for the government and the private sector. This is critical for our Council as well as its international counterparts. We look forward to identifying and addressing key data gaps.
The third institution is the Consumer Financial Protection Bureau. Treasury has set up an implementation team focused on establishing key functions of the bureau such as research and supervision of bank and non-bank financial institutions, and building the CFPB's supporting infrastructure.
The Secretary has designated July 21, 2011, as the date on which the CFPB will assume existing authorities of seven federal agencies, and we have made substantial progress preparing the CFPB to incorporate staff and assume authorities from those agencies.
Let me conclude by expressing the U.S. government's deep appreciation for the meaningful effort our international friends here and around the world have been making to implement fundamental financial reform.
There is no doubt that the regulatory frameworks that many countries had in place ahead of this crisis simply did not work. They failed to prevent a historic global recession that has cost us all dearly. They must be fixed. And in Washington we have tried to lead by example.
But this is a challenge for all of us to meet. In the wake of the severe, globally synchronized financial crisis, we must develop the most globally convergent financial protections the world has ever attempted. So as we protect against future crisis; and as we promote lasting global growth; we need to act in a coordinated fashion.
That doesn't mean that our strategies will be identical. They shouldn't be. While global convergence is essential in areas such as capital and derivatives regulation, in other areas the reforms we seek may be best served by different nations pursuing different means. A specific implementation approach that works for the United States may not work for the United Kingdom.
But we should never forget that we all have the same goal. We need a level playing field. And by implementing new standards; by ending too big to fail; by enhancing global regulation; and by establishing stronger international coordination to prevent future crises, we will improve the soundness and resilience of the global economy. This is about stability. This is about growth. But most importantly this is about better serving our people, our workers, our entrepreneurs, our businesses and the generations to come.
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Selasa, 09 November 2010
Geithner Op-Ed: ‘How India-US Trade Can Scale Greater Heights'
Press Release
U.S. Treasury
WASHINGTON – In an op-ed piece to be published in the November 8, 2010 edition of the Hindustan Times, Treasury Secretary Tim Geithner discusses the growing economic partnership between the United States and India and how trade and investment between our two countries present dramatic and expanding opportunities to build new markets and create high-quality jobs in both nations. Secretary Geithner also reviews the steps that the United States and India are taking to build a firm foundation of stronger and more sustainable global growth.
How India-US Trade Can Scale Greater Heights
By Tim Geithner
This week President Barack Obama is visiting India for the first time, one year after Prime Minister Manmohan Singh's official state visit to the United States in November 2009. President Obama's visit will be an important milestone in strengthening the U.S.-India strategic partnership.
The leading edge of the economic partnership between our countries is the deepening ties between American and Indian business -- ties bolstered by the announcement this weekend of significant new US-India trade transactions.
Across an array of sectors, from U.S. aircraft connecting Indian cities to Indian zinc outfitting American industry, trade and investment between the United States and India is flourishing. Indian exports to the United States grew by almost 40 percent from 2004 to 2009, and American exports to India grew by nearly 170 percent over that same period. After slowing down during the height of the global crisis, bilateral trade has rebounded strongly, growing by more than 30 percent in the first half of 2010.
These rates of growth underscore that trade and investment between our two countries are presenting dramatic and growing opportunities for our business leaders and entrepreneurs to build new markets and create high-quality jobs.
The celebrated expansion of India's mobile phone market is a prime example. With close to 600 million subscribers today, or more than 70 percent of the population 15 years and older, mobile phone access is transforming traditional industries like agriculture and banking by bringing information and services to even the remotest areas. From inventing the optical fiber used to build the infrastructure for mobile phone service, to designing the applications that make mobile banking possible, the ingenuity of both American and Indian companies has driven a telecommunications revolution in rural India--and unleashed new and vibrant economic activity in its wake.
U.S.-India commercial partnerships are also combining to generate solutions through innovation and cutting-edge technology to some of the globe's most vexing challenges--from the delivery of clean drinking water and distributed solar power, to the development of new vaccines and clean transportation technologies.
To take just a couple of examples: an American solar panel manufacturer is partnering with an Indian company to deliver clean distributed power for cell towers in India; in the coming years, this same partnership could provide rural power solutions to other new global markets. And another American research and development company is partnering with an Indian company to find new markets for its optical biosensor technology to develop new therapies for various diseases including "neglected" ones such as leishmaniasis, a parasite that afflicts tens of thousands each year in India and is a growing threat to American service members in Afghanistan and Iraq.
Such opportunities for new markets and growth can only be created and sustained by vibrant, yet stable financial sectors. Both nations are rising to the challenge. While the U.S. implements historic reform to ensure the safety and soundness of its financial system, India is making changes necessary to boost investment in its financial sector, such as expanding access to financial services and developing its corporate debt market.
Even as the promise of U.S.-India ties is starting to be realized in the private sector, our two nations must work together to ensure that these opportunities are built on a firm foundation of stronger and more sustainable global growth. This is the central challenge for policymakers in the United States, India, and the rest of the G-20.
The most significant risk to the global economy today is that the world's largest economies underachieve on growth. Economic recoveries that follow financial crises are typically slower than those that follow other types of recessions, due to the headwinds to growth generated by necessary adjustments in asset prices and the reduction of financial leverage. We must respond by continuing to provide well-targeted support to strengthen growth in the near term even as we put in place plans for greater fiscal sustainability over the longer term.
For growth to be sustainable, we must also work together to change its overall global pattern. Before the crisis, too many nations oriented their economies toward producing for export rather than consuming at home, counting on a few deficit nations to import many more goods and services than they sold abroad. The result was a global economy afflicted by an unstable array of external imbalances, both deficits and surpluses.
Together, we must build a framework for growth that prevents the re-emergence of such imbalances, maintaining external accounts at sustainable levels over time. Doing so will require contributions from every corner of the global economy. Surplus countries will have to boost internal demand through structural reforms, while deficit nations will need to increase their savings. Key emerging economies will also need to move toward market-determined exchange rates in line with economic fundamentals.
India is meeting this challenge, helping to demonstrate the dynamism that can accompany domestic demand-led growth combined with significant exchange-rate flexibility. India is succeeding in fostering greater domestic demand in part by directing economic policies and incentives toward the bottom of the income pyramid. In the coming years, India will also continue to make substantial investments in public infrastructure that will help to drive future growth. In short, India's focus on "inclusive growth," through targeted fiscal spending and investment, is contributing to greater support of Indian households and higher employment.
The United States is doing its part as well. The U.S. economy has been growing for 18 months, with a recovery led by private investment. We are repairing our financial system. Households are saving more, and we will reduce our fiscal deficit as the recovery strengthens. Going forward, we are committed to building on our long-standing openness to investment and trade, while working to ensure through reforms in education and infrastructure that our nation remains fertile ground for invention and innovation.
The U.S.- India partnership is realizing more of its great potential with each passing year. Through continued trade and investment between our businesses and entrepreneurs, and through improved collaboration and coordination between our governments, we will address many common challenges and achieve shared goals, ultimately leading to improved economic well-being for the citizens of both countries.
###
U.S. Treasury
WASHINGTON – In an op-ed piece to be published in the November 8, 2010 edition of the Hindustan Times, Treasury Secretary Tim Geithner discusses the growing economic partnership between the United States and India and how trade and investment between our two countries present dramatic and expanding opportunities to build new markets and create high-quality jobs in both nations. Secretary Geithner also reviews the steps that the United States and India are taking to build a firm foundation of stronger and more sustainable global growth.
How India-US Trade Can Scale Greater Heights
By Tim Geithner
This week President Barack Obama is visiting India for the first time, one year after Prime Minister Manmohan Singh's official state visit to the United States in November 2009. President Obama's visit will be an important milestone in strengthening the U.S.-India strategic partnership.
The leading edge of the economic partnership between our countries is the deepening ties between American and Indian business -- ties bolstered by the announcement this weekend of significant new US-India trade transactions.
Across an array of sectors, from U.S. aircraft connecting Indian cities to Indian zinc outfitting American industry, trade and investment between the United States and India is flourishing. Indian exports to the United States grew by almost 40 percent from 2004 to 2009, and American exports to India grew by nearly 170 percent over that same period. After slowing down during the height of the global crisis, bilateral trade has rebounded strongly, growing by more than 30 percent in the first half of 2010.
These rates of growth underscore that trade and investment between our two countries are presenting dramatic and growing opportunities for our business leaders and entrepreneurs to build new markets and create high-quality jobs.
The celebrated expansion of India's mobile phone market is a prime example. With close to 600 million subscribers today, or more than 70 percent of the population 15 years and older, mobile phone access is transforming traditional industries like agriculture and banking by bringing information and services to even the remotest areas. From inventing the optical fiber used to build the infrastructure for mobile phone service, to designing the applications that make mobile banking possible, the ingenuity of both American and Indian companies has driven a telecommunications revolution in rural India--and unleashed new and vibrant economic activity in its wake.
U.S.-India commercial partnerships are also combining to generate solutions through innovation and cutting-edge technology to some of the globe's most vexing challenges--from the delivery of clean drinking water and distributed solar power, to the development of new vaccines and clean transportation technologies.
To take just a couple of examples: an American solar panel manufacturer is partnering with an Indian company to deliver clean distributed power for cell towers in India; in the coming years, this same partnership could provide rural power solutions to other new global markets. And another American research and development company is partnering with an Indian company to find new markets for its optical biosensor technology to develop new therapies for various diseases including "neglected" ones such as leishmaniasis, a parasite that afflicts tens of thousands each year in India and is a growing threat to American service members in Afghanistan and Iraq.
Such opportunities for new markets and growth can only be created and sustained by vibrant, yet stable financial sectors. Both nations are rising to the challenge. While the U.S. implements historic reform to ensure the safety and soundness of its financial system, India is making changes necessary to boost investment in its financial sector, such as expanding access to financial services and developing its corporate debt market.
Even as the promise of U.S.-India ties is starting to be realized in the private sector, our two nations must work together to ensure that these opportunities are built on a firm foundation of stronger and more sustainable global growth. This is the central challenge for policymakers in the United States, India, and the rest of the G-20.
The most significant risk to the global economy today is that the world's largest economies underachieve on growth. Economic recoveries that follow financial crises are typically slower than those that follow other types of recessions, due to the headwinds to growth generated by necessary adjustments in asset prices and the reduction of financial leverage. We must respond by continuing to provide well-targeted support to strengthen growth in the near term even as we put in place plans for greater fiscal sustainability over the longer term.
For growth to be sustainable, we must also work together to change its overall global pattern. Before the crisis, too many nations oriented their economies toward producing for export rather than consuming at home, counting on a few deficit nations to import many more goods and services than they sold abroad. The result was a global economy afflicted by an unstable array of external imbalances, both deficits and surpluses.
Together, we must build a framework for growth that prevents the re-emergence of such imbalances, maintaining external accounts at sustainable levels over time. Doing so will require contributions from every corner of the global economy. Surplus countries will have to boost internal demand through structural reforms, while deficit nations will need to increase their savings. Key emerging economies will also need to move toward market-determined exchange rates in line with economic fundamentals.
India is meeting this challenge, helping to demonstrate the dynamism that can accompany domestic demand-led growth combined with significant exchange-rate flexibility. India is succeeding in fostering greater domestic demand in part by directing economic policies and incentives toward the bottom of the income pyramid. In the coming years, India will also continue to make substantial investments in public infrastructure that will help to drive future growth. In short, India's focus on "inclusive growth," through targeted fiscal spending and investment, is contributing to greater support of Indian households and higher employment.
The United States is doing its part as well. The U.S. economy has been growing for 18 months, with a recovery led by private investment. We are repairing our financial system. Households are saving more, and we will reduce our fiscal deficit as the recovery strengthens. Going forward, we are committed to building on our long-standing openness to investment and trade, while working to ensure through reforms in education and infrastructure that our nation remains fertile ground for invention and innovation.
The U.S.- India partnership is realizing more of its great potential with each passing year. Through continued trade and investment between our businesses and entrepreneurs, and through improved collaboration and coordination between our governments, we will address many common challenges and achieve shared goals, ultimately leading to improved economic well-being for the citizens of both countries.
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