Prof. Schwarcz Testifies to U.S. Senate Subcommittee on Regulation of Systemic Risk and Insurers

Professor Daniel Schwarcz testified at a hearing on "Examining Insurance Capital Rules and FSOC Process" before the U.S. Senate Subcommittee on Securities, Insurance, and Investments. In his testimony, Schwarcz emphasized that the Dodd-Frank Wall Street Reform and Consumer Protection Act created a flexible and adaptive process for identifying systemically risky nonbank financial institutions. Although this design choice inevitably reduces transparency, Schwarcz suggested that the Financial Stability Oversight Council had done a reasonably good job of addressing this concern. Additionally, Schwarcz testified that the design of regulatory capital rules may vary depending on whether the underlying regulatory goal is protecting a financial institution's customers, or preventing systemic risk.