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US interagency coordination criticised

Friday 11 November 2011 - by Andrew Hickley

US regulators should improve the way they coordinate with each other when writing Dodd Frank Act rules after a review found that many do not have formal policies guiding interagency cooperation.

Regulators including the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Consumer Financial Protection Bureau are engaging in informal and ad hoc coordination when writing rules covering their mandated areas, the Government Accountability Office said on Thursday.

The GAO says the Financial Stability Oversight Council, which consists of a member of each of the country's top regulators, should work with the agencies to establish more formal coordination policies.

These guidelines would clarify issues such as when coordination should occur, the process used to solicit and address comments, and what role the FSOC should play in facilitating coordination.

The fledging FSOC, which is given a statutory duty to facilitate coordination between the agencies has been "evolving" in its nature in the rulemaking process, the GAO says in a report.


The Dodd Frank Act requires a number of agencies to cooperate during rulemaking processes. Most notably the SEC and the CFTC are required to coordinate and consult with each other before they begin rulemakings on swaps or swap-related subjects, in an effort to ensure regulatory consistency and comparability.

However, some areas are not mandated for interagency input even though the final rule could affect a number of different regulators.

The GOA's study looked at 18 rulemakings. While two required interagency coordination, another seven of the rules saw voluntary cooperation between a number of agencies.

Only the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency were found to have rulemaking policies that include guidance on developing interagency rules, though the report argued that even these policies were "limited in their scope or applicability".


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