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“Given the limited authority to the Fed and the SEC to regulate investment banks with primary dealer status, and Congress’s ultimate responsibility for formulating financial regulatory policy, we ask that no action regarding implementation of the MoU be taken before we can determine that it is in the best interest of our nation’s economy and the well being of it its citizens”, US Senators Chris Dodd and Richard Shelby say in a letter sent to the heads of the U.S. Treasury Department, Federal Reserve Board, and Securities and Exchange Commission regarding reports that the agencies are working on an agreement to reform the regulation of U.S. financial institutions.
Any formal agreement among the agencies must not interfere with Congressional efforts to examine the issue, the Senators say. “Given the limited authority of the Fed and the SEC to regulate investment banks with primary dealer status, and Congress’s ultimate responsibility for formulating financial regulatory policy, we ask that no action regarding implementation of the MoU be taken before we can determine that it is in the best interests of our nation’s economy and the well being of its citizens,” the letter states.
“Congress has neither granted the Federal Reserve the authority to permanently open the discount window to investment banks with primary dealer status, nor authorized the SEC’s Consolidated Supervised Entities (CSE) program through which it regulates investment bank holding companies that own depository institutions”, the letter states.