Congress has once again expressed concerns about SIFI designation and the asset management industry, and in particular the openness and integrity of the regulatory bodies developing SIFI policy. In reaction to the Office of Financial Research's (OFR) September 2013 report analyzing the potential systemic risks of the asset management industry, 41 members of Congress penned an April 9, 2013 letter to the Financial Stability Oversight Council requesting that any further review of the asset management industry take place “in an open and transparent manner.” The bipartisan letter also harshly criticizes the OFR report substantively and requests that the FSOC revisit its process and findings to “precisely identify the systemic risks it is trying to address” and “explain in detail how any identified risks would be mitigated” by subjecting asset management firms to supervision by the Federal Reserve. In addition, the letter urges that any regulatory action ultimately implemented should “not limit access to these services or cause them to become cost-prohibitive.”
This April 9 letter follows closely an April 7, 2014 letter
from Congressmen Darrell Issa and Jim Jordon, on behalf of the House Committee on Oversight and Government Reform, sharply criticizing the OFR for its failure to work more closely with the SEC in researching, drafting and revising the report. In that letter, Issa and Jordon pointed out that material changes to the OFR's report offered by the SEC were either ignored or overlooked. The letter stated that SEC staff had reported to the OFR that the draft report contained “multiple and fundamental inaccuracies” in its description of the SEC’s regulatory framework and statutory authority. The April 7 letter also indicated that the staff of the SEC pointed out to the OFR several “citations that did not support the claims being made in the OFR study, as well as instances where the study made claims that needed more support.” The letter takes the OFR to task because these SEC staff criticisms, a number of which were raised later by industry commenters, did not result in changes to the draft prior to publication.