Regulatory Reform Summit 2011
July 13, 2011
- Highlights - Regulatory Reform Summit: Dodd-Frank Impact Analysis
Global Business Model and Strategy Impact
During the “Global Business Model and Strategy Impact” panel, participants discussed how the industry is changing under new regulatory regimes on a global basis. Perhaps the single most compelling issue threatening U.S. competitiveness is international capital and liquidity requirements, and the possible capital surcharge for Global Systemically Important Banks, or G-SIBs.
Donna Milrod, Manager Director and Deputy Chief Executive Officer of Deutsche Bank Americas, said the proposed surcharge for global systemically important financial firms (G-SIFIs) under the Basel III agreement will have a distortive market effect and may result in banks reevaluating their businesses as they look to cover the new fees. Higher capital requirements work to increase the cost of credit which will affect consumers and corporate customers of financial firms. Milrod pointed to the need for the Government Accountability Office (GAO) to conduct a review on the cumulative costs of new regulations under the Dodd-Frank Act. SIFMA has often stated that although we want to implement all the Dodd-Frank regulatory mandates, we need to evaluate the impact of new regulations already underway before layering on others. Additional capital requirements cannot be a substitute for efficient and effective regulation.
When asked about the timeframe for complying with the new rules, Jerry del Missier, Co-Chief Executive of Barclays Capital, said it will be difficult to have an effective outcome with the current deadlines for rulemaking. With so much to do in such a short period of time, Dodd-Frank implementation could have serious unintended consequences. Del Messier emphasized that the collateral effects of the rules must be fully understood prior to implementation. Thomas Gibbons, Vice Chairman and CFO of BNY, said continued regulatory uncertainty is not good for businesses but acknowledged the possible ramifications for implementing regulations without proper analysis on the effect of new rules.
We cannot risk the global competitiveness of any global market, both in the U.S. and across the globe. It is imperative that regulations are consistent and implemented at the right time, in coordination with global initiatives. SIFMA believes that enhanced coordination and cost-benefit analysis are necessary to ensure the financial regulatory system is safe, strong, and well-equipped to fuel economic growth and job creation. To avoid regulatory arbitrage among global financial centers, a number of coordinating bodies are working to create a harmonized network of regulation. SIFMA emphasizes the importance of these harmonized measures in the U.S. and with our regional partners in the Global Financial Markets Association (GFMA): the Association for Financial Markets in Europe (AFME) and the Asia Securities Industry and Financial Markets Association (ASIFMA).