The following is a fact-check from the August 1, 2010 episode of Meet the Press:
MAYOR MIKE BLOOMBERG (I-NY) | The financial reform bill will give the SEC, Fed, and other agencies the responsibility to write regulations. – TRUE
MR. GREGORY: Today is Wall Street different, and will financial reform make Wall Street different?
MAYOR BLOOMBERG: The devil’s in the details. A 2,000-page bill that very few people have ever read, but it basically turns over to the SEC and the Fed and other agencies the responsibility to write regulations. This is a dream piece of legislation for lobbyists and for lawyers. And nobody knows the answer to your question.
According to the recently passed Financial Reform Bill, a new agency will be created, The Consumer Financial Protection Bureau (CFPB), which will be a part of the Federal Reserve and led by a director appointed by the President and confirmed by the Senate. The CFPB was created to independently and autonomously write rules for consumer protections governing all entities – banks and non-banks – offering consumer financial services or products. The CFPB will have a dedicated budget paid by the Federal Reserve Board.
There will also be a new Financial Stability Oversight Council consisting of 9 expert members from the Federal Reserve Board, SEC, FDIC, the new Consumer Financial Protection Bureau and other financial regulators. The council will be chaired by the Treasury Secretary with the sole responsibility to identify and respond to emerging risks throughout the financial system.
Through the new financial regulation, the SEC came out with new powers and will have to hire 800 new employees. Here is Mary Schapiro, Securities and Exchange Commissioner Chairwoman, at a congressional hearing over the subject from the Washington Post:
“The act requires the SEC to promulgate a large number of new rules, create five new offices, and conduct multiple studies, many within one year,” Schapiro told Congress in prepared testimony. “The importance and complexity of the rules coupled both with their timing and high volume and the rule writing agenda currently pending will make the upcoming rule writing process both logistically challenging and extremely labor intensive.”
The Washington Post reports that the SEC must work with the Commodity Futures Trading Commission to write rules for derivatives, and the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation to write rules requiring that banks that issue securities to the secondary market hold 5 percent of the investment on their own balance sheets — a “risk retention” measure.
The new financial legislation does give the SEC, the Federal Reserve, the Consumer Financial Protection Bureau and other regulators the ability to write new rules as the regulators deem fit to weed out systemic risk. Thus, we rate Mayor Bloomberg’s statement TRUE.
Special thanks to crowd-sourcer Shelley for assisting with this fact-check.
This fact-check took a combined 2 hours.