Systemic risk apparently not a priority for regulators, reporters

Almost three years after the financial crisis, regulators are still trying to find ways to deal with systemic risk, according to two top regulators who spoke at the annual conference of the Society of American Business Editors and Writers in Dallas April 7-9.

Meanwhile, business editors and reporters attending the conference appeared to have little interest in systemic risk. Through three days of talks and workshops, it rarely came up.

Responding to questions from RepoWatch’s editor, Mary Schapiro, chairman of the Securities and Exchange Commission, and Richard Fisher, president of the Federal Reserve Bank of Dallas, confirmed that the issue is alive, well and unresolved.

RepoWatch asked Schapiro “what the SEC feels it can do to reform the repurchase market, which appears to be the most important and most ignored element of the financial crisis.” 

“Good question!” Schapiro replied. She discussed the repurchase market briefly and knowledgeably and said the Finanical Stability Oversight Council created by the Dodd-Frank Act is working on the issue.

When RepoWatch’s editor said repo appears to be important, Schapiro said, “No kidding!”

Fisher, who spoke confidently about unemployment and inflation, had no answer when RepoWatch’s editor asked him how the Federal Reserve was handling its new responsibility, systemic risk. He said a committee is studying the issue, and he said he didn’t have anything else to say about it.

On another matter, Fisher said he favors breaking up the too-big-to-fail financial institutions.