The Department of the Treasure threw down the gauntlet with “the executive branch’s plan to promote vibrant and diverse investment and savings opportunities through asset management and insurance”.
Citing the US asset management and insurance markets as the global leaders for diverse investment opportunities and vibrant capital markets, the treasury department in its 176-page report says that post financial crisis regulation might have gone too far, and that asset management firms and insurance companies have different legal, structural and operational characteristics than banks.
To better address systemic risk and solvency, the report highlights:
– entity-based systemic risk evaluations of asset managers and their funds are not the best approach for mitigating risk;
– instead, primary federal and state regulators should focus on systemic risks from products and activities and on implementing Regis that strengthen the asset management and insurance industries as a whole;
– a strong liquidity risk management framework is more effective in addressing liquidity risk than stress testing of asset management firms;
– the state insurance regulators and the Fed should harmonize their respective ongoing domestic work on insurance capital initiatives, as well as continue their efforts to assess liquidity risk management in the insurance sector.
Let the games begin.
The Compliance Strategy Institute held numerous workshops with compliance and risk executives globally and is developing global thematic task forces to discuss approaches for asset managers, individually and industry-wide.