The U.S. Treasury Department strongly refuted claims that it failed to collaborate with other regulators on a study of the asset management industry carried out last year, the Wall Street Journal reports.
In a letter to Rep. Darrell Issa (R-Calif.), chairman of the House Committee on Oversight and Government Reform, the Treasury Department details months of back and forth between the its Office of Financial Research and the Securities and Exchange Commission regarding the study, which, according to the Wall Street Journal, has become a point of contention in the debate over whether asset managers should be forced to comply with stricter regulations.
The treasury’s letter comes in response to claims by Issa and Rep. Jim Jordan (R-Ohio) that they have gathered together documentation—including emails and documents from government officials—demonstrating that the study “ignored or dismissed core criticisms” from the SEC. According to the Wall Street Journal, SEC officials have voiced concerns that the report overstated the potential risks posed by asset managers.
“Your letter suggests that there may have been a predetermined outcome to the OFR’s research. We respectfully disagree,” Alastair Fitzpayne, the treasury’s assistant secretary for legislative affairs, wrote to Issa. “The OFR study provided a ‘brief overview’ of potential risks, while noting the need for additional data and analysis.”
Fitzpayne also pointed out that between February 2013 and the study’s release in September 2013, the OFR and the SEC exchanged 15 drafts and held more than a dozen “in-depth conversations on the substance of the study.” He also asserts that the final draft of the study reflects many of the SEC’s suggested edits.
The decision as to whether large asset management firms such as BlackRock Inc. and Fidelity Investments should face stricter oversight because of the potential risks they pose to the financial system ultimately rests with the Financial Stability Oversight Council, on which both the SEC and the Treasury Department have a vote.