Top financial regulators plan to let the public in on their plans for regulating the asset managment industry sometime this spring, the regulators said Monday.
The Financial Stability Oversight Council, the super-group of regulators empowered under President Obama’s banking reform law to seek out and supervise firms or activities that could threaten the financial system, said after a telephone meeting Monday that it “expects to provide a public update on its analysis this spring.”
The notice means that companies such as BlackRock and Vanguard could soon know whether their industry will be slated for new rules, and if so, what kind of rules might apply.
In a statement, the council also said that it specifically looked into “potential financial stability risks” that might be involved in asset managers lacking liquidity, which is the ability to quickly gain access to cash to pay out clients or creditors, or in borrowing more than they can repay.
The council has been examining the risks that asset managers could pose to the financial system and economy since 2014. Late that year, it put out a request for information about the industry’s efforts.
Headed by Treasury Secretary Jack Lew and comprising all the heads of the top financial regulatory agencies, the council has the power to declare any financial firm “systemically important” and subject it to tighter supervision and stricter regulations.
It has suggested, however, that it might not name specific asset management firms “systemically important” and instead look at other ways the government might regulate their activities.
The industry has argued that asset managers do not pose risks to the entire U.S. economy, because they simply manage their investors’ money. If a firm runs into trouble, it can simply give clients their money back, at a loss if necessary, without sparking panic.
