US financial regulatory group seeks more openness
Treasury Secretary Jacob Lew, right, Patrick Pinschmidt, Executive Director of the Financial Stability Oversight Council, and Federal Reserve Chair Janet Yellen, left, huddle before the start of an open meeting of the Financial Stability Oversight Council, which monitors risk to the U.S. financial system, at the Treasury Department in Washington, Wednesday, May 7, 2014.(AP Photo/Charles Dharapak)
WASHINGTON - A group of U.S. regulators has adopted rules intended to make its deliberations more open as it monitors threats to the financial system.
The Financial Stability Oversight Council voted Wednesday to publish an agenda for its open meetings at least seven days in advance and to release minutes of its meetings, among other things.
The council, which Congress created after the 2008 financial crisis, is led by Treasury Secretary Jack Lew and includes Federal Reserve Chair Janet Yellen.
A 2012 report by congressional investigators found that the council needed to improve its communications with the public.
The council's annual report released Wednesday identified nonbank mortgage servicing companies, which are more lightly regulated than banks, as one area of potential risk.
Business interests that opposed the financial overhaul law that created the oversight council have accused it of operating without transparency. Among those business groups is the U.S. Chamber of Commerce.
Rep. Scott Garrett, R-New Jersey, a member of the House Financial Services Committee and an outspoken critic of the overhaul law, said after the council's meeting that he wasn't satisfied with the changes.
The council "refuses to take serious steps to improve its lack of transparency — as exemplified by the fact that today's meeting was prefaced with a closed-door meeting," Garrett said in a statement. "Instead, it continues to operate in the dark with no accountability to the American people or Congress."
In a closed session of the council before its public meeting, Lew discussed the status of sanctions against Russian officials in response to Moscow's annexation of the Crimean Peninsula and noted the effect of the sanctions on the Russian economy, the Treasury Department said in a news release.
The measures ordered by the U.S. and the European Union, including asset freezes and visa bans, affect people close to the Kremlin. Western leaders hope those hurt by the sanctions will pressure President Vladimir Putin to limit his reach in Ukraine and de-escalate the crisis there.
The leaders have stopped short of imposing broader sanctions on Russia's economic sectors. But President Barack Obama and German Chancellor Angela Merkel said last week that they would move toward harsher penalties if Russia disrupts Ukraine's May 25 presidential elections.
In its annual report, the regulators' group noted that so-called nonbank mortgage service companies are taking on an increasing share of the work of collecting mortgage payments from homeowners and other servicing duties. Those companies aren't subject to the rules applied to banks for maintaining capital reserves against possible losses and other requirements.
A failure of a mortgage servicing company "could have significant negative consequences for market participants" such as investors in mortgage securities, the report said.
In testimony to Congress Wednesday, Yellen cited geopolitical tensions, a renewal of financial stress in emerging markets and a faltering housing recovery as posing potential threats to the system.
Much progress has been made in strengthening the financial sector, but "our job is not done," she said at the council meeting.