“Nobody said financial regulation was easy, and the new Office of Financial Research at the Treasury Department has gotten off to a bumpy start.

“The OFR, created by the 2010 Dodd-Frank financial reform act, would be quick to point out that it is not a financial regulator per se.

“But its mission of monitoring the financial system for possible risks that could bring on a new crisis make it potentially a major player in identifying sectors that require new regulation.

“That accounts for the barrage of criticism that greeted the OFR’s first formal report on a sector that might need the enhanced regulation for “systemically important financial institutions” — namely, the asset management sector that includes mutual funds and other forms of collective investment.”

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“In any case, the feedback was overwhelmingly negative, focusing on the fundamental differences between banks, which operate with their own funds, and asset managers, which act as agents for investors. Predictably, the fund industry rejected the report.

“‘The OFR Study is replete with sweeping conclusions unsupported by data; lacks clarity, precision, and consistency in its scope and focus; and misuses or misinterprets data,’ wrote Paul Schott Stevens, head of the Investment Company Institute, the trade association for mutual funds. ‘These flaws have great potential to confuse or mislead both policymakers and the public.’

“But criticism also came from a watchdog group generally supportive of regulatory efforts. Better Markets criticized the report for its ‘inexcusable’ lack of transparency about how and why the asset-management industry became the focus of the research office’s first report.”

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Read full USA Today article here