On Tuesday, June 13th, Treasury Secretary Steve Mnuchin testified before the House Appropriations Committee in defense of the Treasury Department’s Fiscal Year (FY) 2018 Budget request (see the request here). Mnuchin’s testimony showed an opening to standardize data fields and formats across the nation’s overlapping financial regulatory regimes – just as the Data Coalition has already been recommending to Congress.
First, Mnuchin sees a need to better coordinate separate regulatory regimes with one another. Asked about the role of the Financial Stability Oversight Council (FSOC), which he chairs and which includes the heads of the major U.S. financial regulators, the Secretary told the committee that the “function of FSOC is bringing the [financial] regulators together.” He recommended that Congress explore ways “to give more power to FSOC and specifically the Treasury Secretary…to work with and coordinate the regulators.” The “FSOC,” he continued, “is a very important area to get the regulators to make sure they are working together to deal with [regulatory] overlap.”
Secretary Mnuchin’s recommendations are a prescription for open data standards. Countries like Australia have already reduced regulatory overlap by adopting a common open data structure across multiple agencies’ reporting requirements, saving billions of dollars in compliance costs for the private sector. The Financial Transparency Act would accomplish the same goal here.
You can see the full exchange with House Appropriations Financial Services and General Government Subcommittee Chairman Tom Graves (GA-14-R) here.
Second, Mnuchin sees a need for better information sharing across agencies. That means we need data standards.
Secretary Mnuchin used his testimony to preview Treasury’s response to President Trump’s February executive order on core principles for financial regulation (see EO 13772). President Trump had directed Mnuchin and his agency to figure out the legal and policy changes needed to support a series of seven “Core Principles” (as outlined in the executive order).
The first of Treasury’s reports to the President, A Financial System That Creates Economic Opportunities: Banks and Credit Unions, calls for Congress to address overlapping reports and encourage data sharing (see page 123 of the report). There is one bill already introduced in Congress that tackles these issues: the Financial Transparency Act (HR 1530).
Treasury’s specific recommendations include:
- “Congress should take action to reduce regulatory fragmentation, overlap, and duplication.”
- “FSOC’s statutory mandate should be broadened so that it can assign a lead regulator as primary regulator on issues where agencies have conflicting or overlapping jurisdiction.”
- “FSOC should be reformed to further facilitate information sharing and coordination among member agencies.”
- “Reviewing examination overlap and duplication: Treasury recommends that :…all regulators expand upon current efforts to further coordinate and rationalize their examination and data collection procedures to promote accountability and clarity.”
By empowering the Treasury Secretary to designate an interagency regulatory compliance discovery process, mandating data standards, and directing FSOC member agencies to work with Treasury to harmonize their information collections, the Financial Transparency Act would help the government gain a comprehensive understanding of the true extent of the regulatory overlap within the financial services sector.
It is time to get to work. The Financial Transparency Act should become a priority of this Congress.