“After the 2008 economic crisis, President Obama pledged to hold banks and financial institutions more accountable and shine a light on the government agencies that regulate them, but watchdogs say a new panel created to head off another market meltdown is shrouding itself in secrecy.
“Created by the so-called Dodd-Frank Act, the Financial Stability Oversight Council (FSOC) is tasked with identifying threats to U.S. markets and imposing market discipline. The little-known panel, headed by the Treasury secretary and composed of leaders from the major U.S. financial regulatory agencies, decides whether certain sectors need more regulation and directs the Federal Reserve and the Securities and Exchange Commission to take action.
“But financial analysts from the right and the left — conservatives who oppose Dodd-Frank and want fewer restrictions on banks and the market, as well as progressives who want more laws and regulations — say the FSOC’s activities are too opaque. They complain that the panel is holding too many closed-door meetings and not doing enough to publicize its activities.
“The Government Accountability Office, the investigative arm of Congress, in September issued a report faulting the panel for lacking accountability, transparency and collaboration with key financial regulators. The report also said FSOC needs to do a better job of sharing key financial-risk indicators with other regulators, communicating with the public and setting specific performance goals. The GAO also suggested the panel improve its website.
“But watchdogs and experts on financial-services regulation say the FSOC secrecy issues are far worse than the GAO reported.
“The FSOC’s proceedings make the Politburo look open by comparison,” said Dennis Kelleher, president of Better Markets, a nonprofit that lobbies for stricter banking laws. “No one in America even knows who they are. At the few open meetings they have, they snap their fingers and it’s over, and they are all scripted. They treat their information as if it were state secrets.””
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