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.”

Creating a system of enhanced monitoring of systematic risk and supervision of systematically important financial institutions (SIFIs) is a key objective of global regulatory reform in the aftermath of the financial crisis. Having established criteria for determining the SIFI players in the banking and insurance sectors, the FSB and IOSCO have moved on to determining which non-banks and non-insurance companies may be considered SIFIs. In a January 8, 2014 consultative document, the FSB and IOSCO proposed a methodology for the identification of nonbank, noninsurance financial institutions (NBNI) that pose systemic risks to the global economy.  The consultation document extends the framework already established to identify bank and insurance company SIFIs to all other financial entities.

M]ore than anywhere else in the world, the United States remains a place where a visionary can risk everything on a dream or an idea and have a fair chance of fighting for it.  And he or she can do so in an environment where the investors who underwrite that dream are protected. -SEC Chairman, Elisse Walter

How do you build a financial regulatory system that constrains risk-taking but still allows financial institutions and others to take innovative chances?  This question is at the very heart of financial regulatory reform world wide. No regulator wants to pull the reins so tight that financial innovators will take their creativity elsewhere.  But at the same time, investors deserve some protection in return for their finance, and taxpayers should no longer be expected to bail out the risk takers.  The financial crisis revealed a regulatory regime that was improperly focused, mismatched with what financial institutions were doing outside traditional banking, and unable to keep pace with technological and other innovation. It demonstrated that regulators had placed too much confidence in the capacity of firms to measure and manage their risks. Post-crisis, regulators found themselves faced with the choice of regulating in a highly prescriptive New Deal manner or a more prudential and flexible manner.  Their goal: "to maximize stability and to minimize risk, to enhance capital requirements, to minimize moral hazard and to increase scrutiny by regulators who collectively can see across sectors, grasp their interrelated operations and diagnose problems that have the potential to grow and spread."  All this, while at the same time being nimble enough to permit, yet understand, monitor, and react to new innovations.