Ex-Fed chief: Glut of regulators a 'recipe for indecision, neglect and stalemate'

An increased number of federal agencies authorized to regulate the financial sector in the Great Recession's aftermath has led to a less effective rulemaking system, a former chairman of the Federal Reserve said.

In remarks to the Economic Club of New York Wednesday, Paul Volcker discussed the establishment of the Financial Stability Oversight Committee, created by the Dodd-Frank financial reform law to help coordinate actions by regulating agencies.

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“However the regulatory landscape has been little changed,” Volcker said, according to a transcript of the speech. “The result is that we are left with a half a dozen distinct regulatory agencies involved in banking and finance, each with their own mandate, their own institutional loyalties and support networks in the Congress, along with an ever growing cadre of lobbyists equipped with the capacity to provide for campaign financing.”

Volcker, who chaired the Fed under former Presidents Jimmy Carter and Ronald Reagan, said the glut of regulators has led to interagency friction and overlapping responsibilities. At the same time, he noted that many regulations required by the Dodd-Frank Act (including a major rule bearing his name) remain unfinished.

“The simple fact is the United States doesn’t need six financial regulatory agencies,” he said. "It is a recipe for indecision, neglect and stalemate, adding up to ineffectiveness.”