Contrary to the assertion in Rep. Cummings' letter that the SEC does not delegate tasks to other entities, numerous tasks, in fact, are delegated by the SEC to FINRA and the other self-regulatory organizations, and many of those tasks are far more significant than those set out in Chair White's proposal. As a practical matter, the SEC delegates the entire task of registering broker-dealers and qualifying their employees to FINRA. Further, the CFTC delegates the entire task of registering…

While Director Berner identifies his role as being that of a mere aggregator of information, and not as a policy maker, the information that he collects is largely determined by those who have certain policy views on what creates risk to the financial system. Thus, he is concerned with, for example, securities financing transactions, capital levels at banks, and the operation of central clearing houses.

Mr. Berner’s remarks also suggest that this data collection may not identify the…

It is hard to understand the FRB's rationale for treating margin held in segregation by a swap dealer as the equivalent of an unsecured borrowing by a swap dealer. Perhaps the FRB believes that requiring more capital is better, even if, from the standpoint of risk, the requirement cannot be justified.

However, the argument that more is better does not make the economy any safer, since the increased capital requirement results in higher costs that must be passed on to commercial users…

This excellent article should be read by anyone who is involved in financial regulation, whether at the political or regulatory level (or in the press).

Professor Tuckman is clear and to the point in his explanations as to (i) the benefits that derivatives provide (as well as their potential risks); (ii) the limited role that derivatives played in the financial crisis; and (iii) why a number of the measures taken by financial regulators to address systemic risk (e.g., mandatory…