Corporate Governance

Fed and SEC Agree to Share Information

By Tamar Weinrib

The Federal Reserve and the Securities and Exchange Commission today announced an information-sharing agreement designed to better detect potential risks to the U.S. financial system.  Officials say that this agreement should enhance regulatory cooperation between the two agencies, allowing them to more effectively carry out their regulatory duties.

Under the "memorandum of understanding" between the two agencies, they will share information and cooperate across a number of important areas of common interest including anti-money laundering, bank brokerage activities under the Gramm-Leach-Bliley Act, clearance and settlement in the banking and securities industries, and the regulation of transfer agents.

The two agencies have been working together more closely in light of recent catastrophes including the near collapse of investment firm Bear Stearns. The decision to share information is also a likely forerunner of Congressional action to come as Congress considers how to adapt our regulatory structure to deal with current issues, such as the subprime mortgage securities crisis, which led the SEC to more closely monitor big investment banks' positions and balance sheets.  Also indicative of current regulatory crises is the Fed's decision to put its banking examiners on-site at Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Merrill Lynch & Co. , and Morgan Stanley.  These issues underscored the need for the Fed and the SEC to better combine their resources and share information in an effort to bolster their ability to detect problems.

Click here to learn more.

Full post as published by PomTalk on July 07, 2008 (boomark / email).