Congress demands transparency from secretive global financial bodies
September 12, 2024 | Financial Services: House Committee, Standing Committees - House & Senate, Congressional Hearings Compilation
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In a recent hearing titled \"Transparency in Global Governance,\" U.S. lawmakers scrutinized the opaque interactions between American financial regulators and international governance bodies. The session highlighted significant concerns regarding the lack of transparency in how U.S. regulators engage with organizations such as the Bank for International Settlements (BIS), the Basel Committee on Banking Supervision (BCBS), and the Network for Greening the Financial System (NGFS).
Chairman Barr opened the discussion by expressing frustration over the limited information available about U.S. regulators' dealings with these global entities. Despite invitations to testify, representatives from the BIS and BCBS declined, while the NGFS did not respond at all. This absence of engagement raises alarms about the influence these organizations may have on U.S. financial regulations, particularly given that U.S. regulators have been observed adopting standards set by these bodies without adequate congressional oversight.
Barr pointed out that the lack of transparency is particularly troubling in light of past instances where foreign officials, including those from Russia and China, have scrutinized U.S. regulations for compliance with Basel standards. He emphasized that U.S. financial regulators receive training from these global bodies, yet Congress is often left in the dark about the content and implications of such training.
The hearing also addressed the increasing influence of international standards on U.S. financial regulations during the Biden administration. Barr cited the Basel 3 Endgame as an example, where U.S. regulators incorporated BCBS goals into the capital framework for American banks without public consultation, favoring European banks in the process.
In response to these concerns, Barr introduced the Congressional Banking Regulation Priorities and Accountability Act of 2024, aimed at enhancing congressional oversight of federal financial agencies' participation in global governance. He urged bipartisan support for the legislation, which seeks to align the transparency requirements of financial regulators with those of other U.S. officials.
Ranking member Dr. Foster acknowledged the importance of international regulatory cooperation but defended the role of U.S. regulators in shaping global standards. He argued that U.S. involvement in these organizations does not equate to a loss of authority and highlighted the robust public engagement processes that U.S. regulators follow when implementing international recommendations.
The hearing underscored the ongoing debate over the balance between international cooperation in financial regulation and the need for transparency and accountability to Congress, as lawmakers grapple with the implications of global governance on domestic financial stability.
Chairman Barr opened the discussion by expressing frustration over the limited information available about U.S. regulators' dealings with these global entities. Despite invitations to testify, representatives from the BIS and BCBS declined, while the NGFS did not respond at all. This absence of engagement raises alarms about the influence these organizations may have on U.S. financial regulations, particularly given that U.S. regulators have been observed adopting standards set by these bodies without adequate congressional oversight.
Barr pointed out that the lack of transparency is particularly troubling in light of past instances where foreign officials, including those from Russia and China, have scrutinized U.S. regulations for compliance with Basel standards. He emphasized that U.S. financial regulators receive training from these global bodies, yet Congress is often left in the dark about the content and implications of such training.
The hearing also addressed the increasing influence of international standards on U.S. financial regulations during the Biden administration. Barr cited the Basel 3 Endgame as an example, where U.S. regulators incorporated BCBS goals into the capital framework for American banks without public consultation, favoring European banks in the process.
In response to these concerns, Barr introduced the Congressional Banking Regulation Priorities and Accountability Act of 2024, aimed at enhancing congressional oversight of federal financial agencies' participation in global governance. He urged bipartisan support for the legislation, which seeks to align the transparency requirements of financial regulators with those of other U.S. officials.
Ranking member Dr. Foster acknowledged the importance of international regulatory cooperation but defended the role of U.S. regulators in shaping global standards. He argued that U.S. involvement in these organizations does not equate to a loss of authority and highlighted the robust public engagement processes that U.S. regulators follow when implementing international recommendations.
The hearing underscored the ongoing debate over the balance between international cooperation in financial regulation and the need for transparency and accountability to Congress, as lawmakers grapple with the implications of global governance on domestic financial stability.
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