U.S. Treasury Secretary Jacob Lew cautioned against overhauling recent financial regulations implemented under Dodd-Frank during a speech at SIFMA's annual meeting in Washington, D.C. on Tuesday.
He said that while the burdens of rules need to be taken into consideration, he’s opposed to any measures that would undermine the rules’ integrity.
“When we look at regulation, we have to look at costs and benefits,” Lew said.
It would be a mistake to step back too far, he added. Instead, regulations need to maintain the structure of financial reform, and regulators should use caution when reviewing rules and making changes.
It’s been a difficult environment for regulators to make technical reforms. Years ago, there were not multi-year campaigns to repeal regulations. But today there are concentrated efforts to overhaul the entire rule package.
For example, Congress is considering legislation that would tweak the Financial Stability Oversight Council’s duties and oversight. “It’s not a technical fix to take something that didn’t exist and render it unable to do its job,” Lew said.
Before the financial crisis, there was no place in government where all the financial agencies came together and considered the ongoing U.S. financial stability. It’s an important improvement, he said, adding that the post-crisis financial reforms have been "unquestionably good.”
Instead, regulators should look at emerging risks. Some areas are more ripe for immediate action; others require more study; but it’s certainly something to focus on.
“We can’t just look at solving the problems that existed in 2008. We have to look forward and ask the kinds of questions, ‘What are the risks of the future?’” That’s why global regulators have been focused on issues around money market funds and asset management products, he added.