Scaring people is one way to motivate them. In this address, Chair Gensler left a dramatic impression of the impending threat based on unrelated risks to the financial system from the use of AI. Setting aside the fact that all innovation can be considered threatening, a scare strategy is not a path to good rulemaking. Good rulemaking should address some specific problem or goal with an understandable and realistic process for achieving that goal.

Is there actually some evidence that…

FSOC has not proved successful at anticipating risks to the economy. Its was full of dire warnings about climate change and largely missed the risk of inflation, which turned out to be the not-so-hidden killer of SVB and two other significant banks, as well as necessitating the FDIC essentially having to guarantee the deposits of every bank in the country.

The future of the FSOC as currently configured is worthy of some discussion. The FSOC is a partisan group, composed only of…

If the SEC's requirement for central clearing of repos is to be implemented without significant costs to market participants and the taxpayer, it will be necessary to provide some benefits to market participants that are subject to central clearing of repos. The ability to cross-margin with futures would be a good start.

In his of the amendments to Form PF, Chair Gensler said "the Commissions [meaning the SEC and the CFTC] and FSOC have identified some gaps in the information we receive," which thus necessitated the expansion of the information required by the Form.  

This comment is, for better or worse, an understatement. Form PF was essentially when it was first adopted, over ten years ago, because the questions were so badly conceived and written. That is the reason one so seldom hears about…