Deregulated markets were instrumental in the misallocation of our country’s capital and other scarce resources, which resulted in trillions in mispriced assets, devastated the savings of American families, and resulted in painful levels of unemployment that persists to this day. Just as a few examples . . . American families who had saved for decades — did everything right — could no longer afford to send their children to college. Hardworking men and women entering their retirement years have had to continue working because their retirement nest eggs significantly diminished. Businesses large and small watched their lending costs soar and loan commitments disappear. The negative effects on capital formation in our country were devastating…
It is clear that understanding the principles of regulation and implementing those principles through robust oversight is the core mission of a regulator. A regulator must possess expertise that is informed by current, accurate data and must exercise judgment that is grounded in the mission of the institution and service to the public at large. Rules must be promulgated that implement the law and establish a fair and level marketplace. Rules must also be enforceable and must prevent environments from being fostered that allow fraud to flourish and advantage predatory behavior. A key aspect of robust oversight is ensuring compliance and prosecuting those who violate the law…
Specifically, I have advocated for the Commission to have ongoing, direct access to real-time trading data and current and historical broker-dealer registration data…
Over the last two years, the SEC proposed and adopted a comprehensive set of money market fund reforms that significantly impacted the industry. A key component of that rule package that I advocated for included new disclosure requirements that would exponentially improve the data available to investors and to the Commission. Specifically, the SEC now requires that money market funds report detailed portfolio data to the SEC on a monthly basis…
The SEC can now examine risks arising out of a money market fund’s portfolio composition, exposures to different types of issuers, changes in portfolio maturities, pricing of securities, exposure to repo counterparties, investment in new types of securities (including structured securities), available liquidity, and spreads between market-based NAV per share and the $1.00 share price…
I am hopeful that the value of this work will be recognized and that the Division will be able to fully staff these efforts.
Aguilar goes on to discuss the relationship between government regulators and industry participants.
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