Outside Washington, D.C., there is growing concern about the regulatory burden imposed by the Dodd-Frank Act and the harmful effect it will have on jobs.

Cynthia Richards, New Mexico’s Financial Institutions Division director, tells the Albuquerque Journal that the Dodd-Frank Act is “onerous,” “costly,” “confusing,” and “difficult to implement.”

“When we see this act fully implemented we’re going to see across the nation the effect on competitiveness and the profound effect on the economy, and not for the good.”

Richards explains the Dodd-Frank Act “is largely to protect banks that are too big to fail,” but it is smaller, community banks that will be impacted the most by its regulations.  “I’m overwhelmed with the concern smaller banks have with this act.”

Read the story here.

In a separate article, the Journal reports that small banks that survived the financial crisis “are not so sure they can survive the new federal regulations” put in place by Dodd-Frank. 

One local banker says complying with regulations will cost his bank $500,000 per year.  Others noted that community banks did not cause the crisis and do not have the vast amount of compliance resources that Wall Street firms do.

“We’re small business people. We have to understand and comply with the regulations just like Wells Fargo. We don’t have 70 attorneys on staff to figure it out.”

Michael Martin, CEO of Lordsburg’s Western Bank

 

“We’re being penalized for things none of us ever thought about doing…I was penalized for not lying” about the credit worthiness of potential borrowers.

Craig Reeves, President

First National Bank of New Mexico in Clayton

Read the story here.

The Fort Wayne Journal Gazette interviewed Century 21 President and CEO Rick Davidson who says uncertainty is holding the economy back and the tax hike proposed by President Obama will hurt small businesses:

Davidson said he is trying to stay optimistic about President Obama’s jobs bill proposal but said the commander-in-chief’s comments this week are cause for concern.

“The president talked about more taxes for Americans who make $1 million or more a year,” but that would penalize many small business owners if their operations are counted as income.

“Most of the job creation is going to come from small business,” Davidson said.

Actually, while the President talks about raising taxes on those who make $1 million or more a year, his plan would increase taxes on those who earn more than $200,000 a year – an even bigger hit to small businesses that create the majority of jobs in the U.S.

Read the story here.

Today’s American Banker includes a dead-on piece about how the Dodd-Frank Act, with its 2,300 pages and more than 400 regulations, is “regulatory overkill” with unintended consequences that hurt consumers and the economy.

“It's a fool's mission for our government to try to micro-manage our financial system — and for all the lip-service paid to balancing regulation and markets, that's precisely what Dodd-Frank purports to do.”

The Banker article notes the Dodd-Frank Act will result in higher consumer costs, fewer and bigger banks, fewer mortgages, and tighter credit.

Although promoted by its supporters as Washington’s response to the financial crisis, the article rightfully points out:

“…the law doesn't even try to address what many regard as key culprits in the financial crisis — the roles of Fannie Mae and Freddie Mac, the credit ratings agencies and the fact that our financial system is more consolidated than ever in the hands of a few too-big-to-fail banks.”

Read the article in full here.

Government doesn’t create jobs.  But it is the responsibility of government to create a fertile environment that enables the economy to grow, that allows businesses to expand and hire.  The Dodd-Frank Act – along with other Obama Administration policies such as the stimulus, Obamacare and threats of higher taxes – does the exact opposite.  All have created uncertainty and spawned a host of new regulations – at a time when America is already suffering through the longest sustained high unemployment rate since the Great Depression.  The country’s jobless rate has been above 9 percent for 27 of the last 28 months.

The answer to high unemployment isn’t still more gargantuan laws passed by Congress that are full of harmful regulations, it’s policies that break down barriers to business growth and hiring.  Earlier this week, the Subcommittee on Capital Markets and Government Sponsored Enterprises considered 5 bills that do just that.

As one job creator who testified at the Subcommittee’s hearing stated:

“I believe that all 5 bills being considered today are important for our country’s entrepreneurs and will help improve access to capital for startups.”

The Washington Post reports today on another failure of one of the Obama Administration’s foreclosure mitigation programs.

In an article headlined “HUD program to help struggling homeowners falling short,” the Post notes this is “the latest in a series of efforts that has left funds allocated by Congress unspent and has failed to help as many” borrowers as promised.

The Emergency Homeowners’ Loan Program, which the Post in an earlier article described as a $1 billion “give away” program, is estimated by the Obama Administration to lose 98 cents for every one dollar it spends because of the program’s high default rate.

The House passed legislation 242-177 earlier in March to terminate this failed $1 billion program.  H.R. 836, sponsored by Financial Services Committee Vice-Chairman Rep. Jeb Hensarling and Chairman Spencer Bachus, ends the program.  So far, the Senate has failed to take any action on this bill to terminate this costly program that is obviously not working.

The Congressional Budget Office estimated that passage of H.R. 836 would cut the federal budget deficit by $840 million.

As Rep. Hensarling asked when the bill was voted on by the House, “This nation is drowning in a sea of red ink…If we can’t terminate ineffective programs in order to save our children from bankruptcy and help create jobs, how are we going to make the tough decisions that are necessary to save the country from bankruptcy?”

NOTE: Today, the Capital Markets and Government Sponsored Enterprises Committee held a legislative hearing on H.R. 2940, and four additional proposals, aimed at promoting small business capital formation by removing government roadblocks.

By Rep. Kevin McCarthy
Special to Roll Call
Sept. 21, 2011, Midnight

Twenty-six years ago, I started a small business: a deli I creatively named “Kevin O’s.” At 20 years old, I had limited culinary skills and lived in a time that predated the Food Network. In short, I was pretty much making new sandwiches as I went along.

Fortunately for me, there were enough people in Bakersfield, Calif., who seemed to like my sandwiches (most famously, the turkey, cream cheese and artichoke hearts on Holland Dutch crust). My business was successful enough that I could hire a few employees, and after a while, I was able to sell the business and use the money I made to put myself through college.

When I think back to the decision I made to start Kevin O’s, I don’t even have to wonder whether I would take the same risk in today’s regulatory environment: The answer is, unfortunately, pretty clear — I wouldn’t.

I cringe at the thought that today’s entrepreneurs even have to consider the costs of complying with duplicative, onerous and burdensome regulations before making that leap of faith to start a new business, purchase equipment and hire employees.

Today, there’s no question that small businesses are the engine of the American economy. They represent 99.7 percent of all employer firms, pay 44 percent of the total U.S. private payroll, employ more than half of all private-sector employees and have created 64 percent of all net new jobs during the past 15 years.

It doesn’t take close examination of these statistics to come to the obvious conclusion that the solution to our nation’s persistently high unemployment must include a plan to allow for more robust small-business growth.

In order to flourish, entrepreneurs and small-business owners need fewer regulatory restrictions and greater access to capital to start and grow companies and get more people working. This capital allows ideas to become real products and services, which in turn create jobs in communities and value for consumers. Unfortunately, onerous federal regulations dampen both innovation and access to capital because of the restrictions and compliance burden they place on these enterprises.

In 2010, annual regulatory compliance costs totaled $1.75 trillion, which far exceeded the $191 billion collected in corporate income taxes. These compliance costs hit small businesses disproportionately — studies indicate that small companies with fewer than 20 employees spend 45 percent more per employee to comply with complex federal regulations than larger companies spend.

Additionally, restrictions on the manner in which capital may be raised stem from outdated Depression-era regulations — they predate not only Twitter and Facebook, but cellphones and color television.

One such restriction is the “solicitation prohibition” contained in Rule 506 of Regulation D of the Securities Act of 1933. It states that in order for a business owner to “solicit” capital from an investor, the business owner must have a pre-existing relationship with said investor. If the same business owner wanted to attract investments through a securities offering from individuals outside of his immediate universe, the business owner must face registration with the Securities and Exchange Commission.

SEC registration is a process that can easily cost millions of dollars and take months, depending on the business and capital being sought.

In other words, if I had wanted to expand Kevin O’s deli across California’s Central Valley by opening five additional stores and needed more capital than a typical business loan, a good way would be through selling securities to investors. Unfortunately, I would have been prohibited from being an entrepreneur and asking people I didn’t know to invest in my business, even if they were already deemed “accredited” by the SEC.

I would have had to register with the SEC and incur all of the associated extra costs and legal fees just to solicit investment from wealthy and sophisticated millionaire investors.

This regulatory obstacle is actively preventing job creation, which is why I’ve introduced legislation to repeal this burdensome solicitation prohibition. My bill, the Access to Capital for Job Creators Act, will help entrepreneurs and small-business owners access the capital they need to be innovative, dynamic and, ultimately, become the thing our economy needs most right now: job creators.

This legislation is simply one step of the many that are needed to promote job creation and economic growth, but it’s a vital step forward. By unshackling entrepreneurs and small businesses from excessive federal regulations, our economy’s job-creation engine will once again put us back on the path to prosperity.

House Majority Whip Kevin McCarthy (R-Calif.) serves on the Financial Services Committee.

Tomorrow, the Capital Markets and Government Sponsored Enterprises Subcommittee will hold a hearing on five proposals designed to help small businesses access the capital markets for the financing they need to grow their companies and hire more workers. This hearing continues the Full Committee’s ongoing efforts to promote small business capital formation and job creation.

One of the bills on tomorrow’s agenda is H.R. 2167, the Private Company Flexibility and Growth Act. The bill has been introduced by Rep. David Schweikert.  Witnesses scheduled to testify before the Subcommittee are praising the bill as the type of pro-growth proposal needed to improve the economy.  The legislation would modernize the shareholder threshold for mandatory registration with the Securities and Exchange Commission from 500 shareholders to 1,000 shareholders.

Following are excerpts from some of the testimony in support of H.R. 2167:

Vincent Molinari, Founder and Chief Executive Officer, GATE Technologies LLC:
“Turning to the specific proposals being considered today, the proposed reform of Regulation D, as part of Representative David Schweikert’s Private Company Flexibility and Growth Act, would be a welcome change in the capital formation process that would promote economic expansion and job creation.”

“Currently, entrepreneurs and small businesses cannot access the capital they need to grow and create jobs. A record 41 percent of small business owners cannot get adequate financing, according to the National Small Business Association – up from 22 percent in 2008. A critical source of funding – the public capital markets – has been largely closed off to America’s proven job creators.”

H.R. 2167 “will improve the ability of small companies to access desperately needed capital. By reducing the regulatory burden and expense of raising capital from the investing public, Congress can boost the flow of capital to small businesses and fuel America’s most vigorous job-creation machine.”

Mr. William D. Waddill, Senior Vice President and Chief Financial Officer, OncoMed Pharmaceuticals, Inc., on behalf of the Biotechnology Industry Organization:

“[Increasing] the shareholder limit from 500 to 1000 would relieve small biotech companies from unnecessary costs and burdens as they continue to grow. As it stands, the limit encumbers capital formation by forcing companies to focus their investor base on large institutional investors at the expense of smaller ones that have been the backbone of our industry. Further, it hinders a company’s ability to compensate its employees with equity interests and negatively affects the liquidity of its shares.

“Increasing the shareholder limit and exempting employees and accredited investors from the count are measures that, together, would remove significant financing burdens from small, growing companies.”

Mr. Matthew H. Williams, Chairman and President, Gothenburg State Bank:

“This change would enable banks to deploy their capital in lending rather than spend it on regulatory requirements that provide little incremental benefit to the banks, shareholders, or the public.”

H.R. 2167 would provide “another valuable capital tool as banks work to improve the economy in our local areas and in the whole of the U.S.”

Associated Press: Congressional panel investigates Ga. bank failures

Published: Tuesday, August 16, 2011

Georgia holds the dubious distinction as the epicenter of bank failures in the aftermath of the Great Recession. But lawmakers who gathered at a congressional hearing Tuesday to investigate the causes questioned whether some of the shuttered banks were victims of overzealous regulations and strained relations with examiners.

Georgia has suffered 67 bank failures since 2008, far more than any other state. Many of those banks collapsed due to lax lending practices that left them laden with bad debt after the downfall of the housing market. But other troubled banks with better track records struggled to broker deals with regulators, and their failures wiped out generations of wealth, said U.S. Rep. Lynn Westmoreland, the Georgia Republican who organized the hearing.

"Now strict enforcement has created more failures. Banks that are too big to fail survived. Banks too small to save have been cut lose," Westmoreland said. "I'm convinced there's a middle ground between these two extremes."

Bank executives complained of testy relations with regulators and onerous legislative restrictions. Chuck Copeland, the chief executive of First National Bank of Griffin, said "second guessing and weariness" plagues interactions with bank examiners. And Michael Rossetti, the president of Ravin Homes, said lenders are overwhelmed by the new rules imposed by last year's Wall Street Reform and Consumer Protection Act, passed in response to the 2008 financial crisis.

"We are being regulated to death in all of our personal business lives," Rossetti said.

Regulators defended their policies, which they said helped banks and borrowers navigate the slow economic recovery. The FDIC brought stability to the banking system by quickly resolving problems with failed banks while saving the financial system billions of dollars, said Christopher Spoth, an FDIC official.

Georgia, which U.S. Rep. Spencer Bachus of Alabama called "ground zero" for the banking crisis, was a convenient site for the hearing. The collapse of the housing market in 2007 devastated the nation's financial network, but Georgia's banking system was among the hardest hit.

One of the reasons, Spoth said, was that Georgia's banks were too eager to make construction loans in the mid-2000s, when the state's economy was booming and real estate prices were on the rise.

"Not many expected the housing collapse," said Spoth.

Other systemic problems could be traced to the 1990s, when state regulators seemed to relax strict standards to make it easier for potential bankers to get charters, said Gary Fox, the former chief executive of Bartow County Bank, which failed in April.

That led to a glut of banks in small communities that couldn't support new lenders, forcing them to seek more business at lower rates in other markets. Soon, competitors were flooding the metro Atlanta market trying to outdo each other.

"It only takes a couple of folks to pollute the pool," he said.

Westmoreland and U.S. Rep. David Scott, D-Georgia, are pushing legislation that calls for a review of the FDIC aimed at investigating whether regulators are hampering rather than helping the economic recovery of the financial industry. The measure passed the House and is now pending in the Senate.

"Our banks are like the heart of our system. It's a heart that pumps out the blood. It is banks that pump out credit, pump out cash, pump out the lending, so the economy can grow," said Scott. "When we have the rash of bank failures ... then we've got to dig deep and find out what happened."

But others said regulators shouldn't shoulder all of the blame.

"That's human nature, to say someone else caused my problems," said Bachus, who chairs the House Banking Committee. "And the bottom line is that the regulators may have made a mistake, but I don't think in many cases they forced the failure of banks."

Published: Tuesday, August 16, 2011

Financial regulators have taken a public thrashing for going easy on banks before the financial crisis hit, allowing institutions big and small to dole out dubious loans. Now, according to some community bankers, regulators have abandoned their light touch for a heavy hand at a time when the industry is struggling to recover.

The Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency have dispatched on-site examiners to scour banks for minuscule problems, bankers said in Congressional testimony on Tuesday. While regulators say they are trying to prevent further bank failures, bankers complain that the examinations amount to nitpicking.

“We have found the field examiners less willing to disclose conclusions and very guarded in acknowledging progress in those areas where we may have been performing well,” Chuck Copeland, the chief executive of First National Bank of Griffin, Ga., said at a House Financial Services subcommittee hearing in Newnan, Ga.

Since the crisis hit, Georgia has had 67 institutions fail, more than any other state. Community banks, those with $10 billion or less in assets, make up the bulk of those now-shuttered institutions.

For all the talk of Bank of America’s beleaguered stock price and Goldman Sachs’s disappointing earnings, small banks are faring far worse than their large Wall Street counterparts. More than 380 banks have failed since early 2008; 326 of which were community banks, according to the F.D.I.C.

“The F.D.I.C. is keenly aware of the significant hardship of bank failures on communities in Georgia and across the country,” Bret D. Edwards, the head of the agency’s division that oversees bank failures, said in prepared testimony before the financial services committee.

But some bankers say their regulators are making matters worse by misunderstanding the cause of the industry’s woes. Mounting losses at small banks are not owed to reckless risk-taking, community bankers say, but the unforeseen collapse of the commercial real estate market in the Southeast.

“Did we have a role setting ourselves up to become victims? No doubt,” said Mr. Copeland of First National Bank of Griffin, a nationally registered bank that is overseen by the Office of the Comptroller of the Currency. “But did we recklessly pursue growth and earnings at all cost with no regard to the other elements of our mission? Never.”

That message is lost on regulators, he said. “We understand that it is not a personal affront; it is simply this environment of second-guessing and weariness in which we are all operating.”

In testimony before the subcommittee, regulators said they were taking steps to address the perception that their examiners are overly strict.

“The Federal Reserve takes seriously its responsibility to address these concerns,” Kevin M. Bertsch, an associate director of the Fed told the subcommittee. The Fed, he said, has created training programs for its examiners and conducts occasional reviews of their examinations.

For its part, the F.D.I.C. said it was reaching out to bankers for guidance on the examination process. In 2009, the agency created the Advisory Committee on Community Banking, made up of small bankers from across the country, according to Mr. Edwards of the F.D.I.C.

“The F.D.I.C. takes great care to ensure national consistency in our examinations,” Mr. Edwards said.

Promises are unfulfilled while the costs are real

By Rep. Sean Duffy

It was one year ago today that President Obama signed the so-called "Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010." Like other signature pieces of legislation of this administration, the name can be misleading. Like the so-called "stimulus" that stimulated nothing but more government debt, this bill fails to actually reform Wall Street or protect consumers, which is a remarkable accomplishment, considering it was more than 2,300 pages long and contained more than 400 regulations and mandates.

For small community banks and credit unions, like those in Central and Northern Wisconsin, the hundreds of new rules will require an estimated 2,260,631 labor hours just for compliance. Those are hours that your local bank or credit union will spend dealing with some Washington bureaucrat instead of focusing on the needs of customers like you.

Just because Wall Street is in New York and has a bad reputation doesn't mean it's right or fair to lump the "little guys" in Wausau, Hayward and Superior in with them. As one of the few members on the House Committee on Financial Services from the rural Midwest, I have made it a top priority to speak up for the community banks and credit unions that are on Main Street, not Wall Street.

That's why I've tried to reform the centerpiece of the Dodd-Frank law, the Consumer Financial Protection Bureau (CFPB), a brand-new agency that will cost the American taxpayers more than $329 million for 2012 alone. I am all for protecting consumers but this agency actually could hurt consumers and slow economic recovery because of the additional regulatory burden it creates for small, local financial institutions. More troubling is the lack of accountability of the CFPB, which will be led by a single, unelected bureaucrat who can set his own budget with no congressional oversight.

Today, the House will vote on H.R. 1315, a common-sense bill I've introduced to increase consumer protection and government accountability. It would replace the director with a bipartisan commission and establish a meaningful review process of CFPB rulings that are inconsistent with the safety and soundness of the banking system. This bill doesn't get rid of the CFPB, it simply recognizes the reality that we cannot separate consumer protection from the safety and soundness of the banking system. If our banking system fails, our economy fails and ultimately, consumers suffer. This measure reflects my commitment to a system of checks and balances, and a financial system that is safe, sound and accountable.

The financial crisis that dragged our nation into a recession warranted action. Dodd-Frank was rammed through Congress on claims that by increasing government mandates and control over the private economy, we would see "robust growth in our economy" and "greater economic security" for our working families and small businesses. One year later, with new business creation at a 17-year low and paralysis in the private sector, it's clear that Dodd-Frank has woefully underdelivered. While the promises of Dodd-Frank remain unrealized, its costs on the economy are real. It will have cost more than $1.25 billion by this time next year, lead to the hiring of thousands of new bureaucrats and will continue to be a drag on the private sector for decades to come.

Job creation has been and will continue to be my top priority in Congress. Part of getting our economy growing again and getting our people back to work means unraveling the burdensome mandates and regulations that are not just causing uncertainty in the marketplace, but killing jobs in America. One year after Dodd-Frank, let's recommit ourselves to smart regulation that will help establish a job-friendly environment, protect consumers and turn this economy around.

Rep. Sean Duffy, Wisconsin Republican, is a member of the House Committee on Financial Services.

The failures of the Dodd-Frank Act continue to mount.

Dodd-Frank Risk Panel Delays Create ‘Guessing Game’

By Cheyenne Hopkins and Ian Katz - Jul 18, 2011
Posted at Bloomberg.com

A team of regulators charged with preventing another financial crisis is fending off criticism it’s moving too slowly to identify the firms whose failure could pose a threat to the economy.

The year-old Financial Stability Oversight Council planned to start designating systemically important non-bank financial companies, such as insurers, as early as the middle of this year. The council met today without setting the criteria it will use to decide which firms could threaten to bring down the financial system, as American International Group Inc. (AIG) almost did in 2008.

The delays make it harder for financial firms to plan, fueling complaints that the industry is being hamstrung by regulatory uncertainty. Companies that could be deemed systemically important may have to wait several months to find out if they will need to raise capital or reduce leverage to comply with the council’s findings.

“Industries need to know what their cost of capital will be,” said Douglas Landy, a partner at Allen & Overy LLP, who once worked at the Federal Reserve Bank of New York. “Will they be regulated? You can’t have it be a guessing game.”

Extra Scrutiny

The council, known as FSOC, completed a rule today determining when derivatives clearinghouses require extra scrutiny because of their importance to the financial system. It also released a study evaluating treatment of secured creditors when banks are shut down.

“We have an obligation together to do the most careful, best job we can to make sure we put in place reforms that are going to endure for generations and leave us with a more resilient, more stable system,” Treasury Secretary Timothy F. Geithner, the council’s chairman, said at today’s meeting.

The FSOC, which also includes Federal Reserve Chairman Ben S. Bernanke and the chairmen of the Securities and Exchange Commission, Federal Deposit Insurance Corp. and Commodity Futures Trading Commission, was created by the Dodd-Frank financial overhaul law signed by President Barack Obama on July 21, 2010.

“After one year, it’s already clear that the Dodd-Frank act is reshaping the regulatory landscape -- filling gaps, reducing systemic risk and helping to restore confidence in the financial system,” SEC Chairman Mary Schapiro said at the FSOC meeting.

JPMorgan, Citigroup

Under Dodd-Frank, bank-holding companies with more than $50 billion in assets, which include JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Goldman Sachs Group Inc. (GS), are automatically considered systemically important. One of the tasks of the oversight council is to determine which non-banks, such as private-equity firms, money managers, hedge funds or insurers, need the same designation and will be subject to additional oversight by the Fed.

The FSOC is also working without a full lineup of 10 voting members because Obama administration nominees haven’t been confirmed by the Senate. The Office of Financial Research, a data-collection and research unit created by Dodd-Frank to help the council, doesn’t have a director and as of last week had only 24 of the 60 employees scheduled to be on board by September.

The research office will gather information that can be used by the FSOC to force firms to raise capital, increase liquidity and sell assets deemed too concentrated in any segment of the economy.

‘Not Fully Functioning’

The FSOC “was supposed to be the centerpiece of Dodd-Frank and is not fully functioning,” said Jaret Seiberg, a financial services policy analyst at MF Global’s Washington Research Group. “A year into Dodd-Frank, our expectations were the FSOC would be running on all six cylinders, and it’s just not there.”

Plans to designate systemically risky firms were set back by at least several months when lawmakers and industry executives complained that proposed criteria were too vague -- a criticism Bernanke and other regulators didn’t dispute.

“What you need is clarity so people inside the box or outside the box understand why they are inside or outside,” Representative Randy Neugebauer, a Texas Republican and chairman of a House Financial Services Committee panel, said in an interview. A January proposal listing criteria for designating non-bank financial companies “just restated” the language in Dodd-Frank without adding detail on how the council would make decisions, he said.

Size, Leverage

Richard Spillenkothen, a former director of banking and supervision for the Fed, suggested that the council should tie some of the proposed criteria -- including size, concentration, interconnectedness and leverage -- to specific measurements.

The FSOC hasn’t “put any numbers to those metrics,” Spillenkothen said. He suggested a revision with “some numeric of what we are talking about, without making it exclusively formulaic.”

The collapse of AIG’s financial-products unit in 2008 was an impetus for Dodd-Frank and the FSOC’s creation. Collateral payments to banks that had bought protection from AIG through credit-default swaps led to a $182 billion taxpayer-funded bailout that gave the government a majority stake in the insurer.

Industry Groups

Industry groups, including the Investment Company Institute, which lobbies for the mutual fund industry, and the Managed Funds Association, representing hedge funds, have pressed regulators to avoid being designated systemically important.

In addition to releasing preliminary rules for designating clearinghouses, the FSOC has conducted studies on the Volcker rule, which restricts banks from trading solely for their own profit; and concentration limits, or market-share size of the largest banks.

The FSOC’s work on systemic risk shouldn’t be done too quickly because it must be thorough, said Kim Olson, a principal at Deloitte & Touche LLP.

“The idea is to get it right,” she said. “There are different things that can make you systemic, so how do you capture that and capture that in a balanced manner? These definitions, these concepts, don’t come in precisely formed definitions.”

Data Collection

The financial research office, set up to help the FSOC decide on systemic-risk designations, risks duplicating data- collection efforts at other regulators.

The Fed created the Large Institution Supervision Coordinating Committee last year to support the central bank in its systemic research, and the Federal Deposit Insurance Corp. formed the Committee on Systemic Resolutions to advise it on the systemic activities of banks.

The Office of Financial Research has been “way too slow,” said Allan Mendelowitz, a former regulator of the Federal Home Loan Banks and one of the original creators of the idea for a research division. The Treasury, which houses the office, is “ambivalent” because it doesn’t want the office contradicting its own views, he said.

Acting Leaders

FSOC is also tackling the issues with only half of the 10 voting members having been confirmed to their jobs. The FDIC, the Office of Comptroller of the Currency and the Federal Housing Finance Agency all have acting leaders that have yet to be approved by the Senate.

Former Ohio Attorney General Richard Cordray, introduced today as Obama’s pick to lead the Consumer Financial Protection Bureau, will also need Senate confirmation. Retired Treasury official Roy Woodall is awaiting confirmation for an FSOC seat designated for an insurance specialist.