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sifma on cras and the eu commission September 8, 2008

Posted by Bradley in : Uncategorized , trackback

SIFMA today (the letter is dated 5 September (the final date for responses), although the press release carries today’s date) joins EACT in critiquing the Commission’s proposals for the regulation of cras. Like EACT, SIFMA is very critical of the consultation timetable:

Given the difficulties posed by this framework, it is disappointing that pressure to regulate should cut short a thorough consultation. Precipitate regulatory action produced by extraneous pressure often produces economic distortions, market inefficiencies, and anti-competitive outcomes. For this reason, few disagree that stakeholders should be consulted with sufficient lead time to take full advantage of their expertise, and to ensure that unforeseen, unintended, or undesirable consequences are identified and mitigated. In this case, the financial services industry has been asked to comment on an extensive regulatory apparatus within four weeks — half the time traditionally allotted. It is worth noting that the US Securities and Exchange Commission (SEC) split its CRA reform proposals into two parts and allowed non-congruent 60 day comment periods. To be sure, CRAs have been the subject of several years of regulatory consultation since the Enron collapse, but that dialogue is of little relevance in the present circumstances. None of the previous consultations envisioned regulation on the scale now proposed, nor gave any indication that such measures were contemplated. We wish, therefore, to share our discomfort with the reduction of a bedrock principle of the EU regulatory process to a near formality.

SIFMA also endorses principles rather than “rigid rules”. And says there’s insufficient attention to the self-regulatory possibilities and to ongoing work in other jurisdictions.

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