WASHINGTON — Securities and Exchange Commission Chairman Gary Gensler said the Federal Reserve is responsible for delays in issuing a rule that would make it easier for bank regulators to claw back the compensation of failed bank executives.
Speaking before the House Financial Services Committee on Tuesday, Gensler said the Fed has told the SEC "at the staff level" and "at the chair level" that the central bank is not yet ready to move on the executive compensation rule, which was mandated by the Dodd-Frank Act in Section 956 of the law.
The long-lingering and incomplete rule, which financial regulators were meant to complete jointly within nine months of the passage of the law in 2010,
Most recently, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Federal Housing Finance Agency
"I think that the American public definitely deserve that we do this, and I'm supportive and I've asked staff to work on it, but I understand that the Federal Reserve is not willing at this time to move forward," Gensler said.
Gensler's remarks came in response to a series of questions from Rep. Nydia Velázquez, D-N.Y.
"We will not slow the Federal Reserve down," Gensler said. "We will be ready whenever they're ready."
Lawmakers also pressed SEC officials on an accounting bulletin that affects banks' custody agreements and argued over pending stablecoin legislation.
Republicans on the House Financial Services Committee continued their pushback against the
In letters sent before the panel's hearing with Gensler, House Financial Services Committee Chairman Patrick McHenry, R-N.C., and other top Republicans asked Gensler and prudential bank regulators to provide interagency communications regarding the guidance.
The lawmakers — who also include Rep. Andy Barr, R-Ky., the chairman of the subcommittee on financial institutions and monetary policy; Rep. Bill Huizenga, R-Mich., the chairman of the subcommittee on investigations; and Rep. French Hill, the vice chairman of the full committee — said in the letters that they are concerned that the SEC guidance didn't take into account the work that banking agencies were pursuing on crypto banking, and that the SEC's guidance came as a surprise to banking regulators.
"SAB 121's publication may have disrupted this interagency initiative," the letters said, referring to an unpublished Request For Information on crypto custody from the prudential banking regulators. "Additionally, it appears that the federal prudential regulators were not privy to the SEC's initial decision to issue SAB 121."
The committee also
Rep. Maxine Waters, D-Calif., the panel's ranking member, said the legislation must include the Fed playing a "dominant role" in overseeing the market and ensuring stablecoins are backed by safe and liquid reserves like short-term Treasury bills.
"I've made a public statement to you about bipartisanship," she said to McHenry. "Let's see what you do with it."
McHenry, in response to Waters, said that
"Now the nature of how we do that is where things get a little tougher," he said. "But I thank the ranking member for the outreach and the public statement. She has privately told me, in no uncertain terms, don't get cornered by Maxine Waters."
