July 16, 2015
Five years ago, the Dodd-Frank Act was signed into law to address critical issues that triggered the worst financial crisis since the Great Depression. Thousands of Americans had lost their jobs, watched their savings dwindle, and were forced out of their homes. The Commission and our fellow regulators have been working hard to strengthen our nation´s financial systems by implementing the rules mandated by the Dodd-Frank Act and by enacting other critical reforms to protect investors and our markets. I especially want to thank the expert, hard-working SEC staff for their dedication to these efforts to build a lasting regulatory regime for a robust financial system that supports the broader U.S. economy.
The Commission has taken action to address virtually all of the mandatory rulemaking provisions of the Dodd-Frank Act, and at the same time we have focused on additional measures to bolster our financial infrastructure. Within a year of the legislation taking effect, the Commission began bringing greater transparency and oversight to hedge fund and other private fund advisers with an extensive series of reforms. The Commission also established stronger standards for the clearinghouses that stand at the center of the global financial system and built an enhanced program for their supervision.
Since I became Chair a little more than two years ago, the agency has continued to advance reforms for stronger, more resilient financial markets. Working with our fellow financial regulators, we finalized the Volcker Rule´s restrictions on proprietary trading and investments by banks. To combat the inflated credit ratings that contributed to the crisis, the Commission adopted a comprehensive package of reforms to the governance and management of the credit rating agencies. We put in place the foundational rules for a new regulatory framework for security-based swaps.
The Commission set up new safeguards to protect municipalities and investors in the municipal securities markets from conflicted advice and unregulated advisors. We adopted wide-ranging rules for the asset-backed securities market that increase the accountability of securitizers and better protect investors. And we proposed a suite of mandated rules to improve the transparency of executive compensation and require executives to pay back compensation that they were awarded erroneously.
The overarching objective of these rulemakings is to promote the long-term sustainability of the U.S. financial system. That is also the objective of the other powerful tools that the Dodd-Frank Act gave the SEC, such as the whistleblower award program and other enhancements to the SEC´s enforcement authority. The whistleblower program has increased the efficiency of our program by expanding whistleblower protections and remedies for retaliation while creating powerful incentives for whistleblowers to come forward with evidence of financial wrongdoing.
While the worst of the financial crisis is behind us, the Commission intensively continues its critical work beyond the Dodd-Frank Act to fulfill our obligation to protect investors, enhance market stability, and promote capital formation. Doing so today requires a dynamic, persistent assessment of the risks to investors and markets, as well as to the financial system as a whole.
To address the risk of a recurrence of the investor runs we saw during the crisis, for example, we adopted transformative rules that will fundamentally change the way money market funds operate. We also now require additional safeguards from the broker-dealers who manage customers´ securities and cash. And we are continually working to assess and address specific elements of today´s equity market structure to optimize them in the interests of investors and public companies.
The Dodd-Frank Act was designed to strengthen our financial system, and the Commission has furthered that goal both through our implementation of the statute and through our own initiatives. Lasting reform – not just "checking the box" for a list of rules – is the only way we can safeguard against another financial crisis. With increased transparency, better investor protections, and new regulatory tools, the Commission continues to work towards a stronger marketplace and financial future for all Americans.