(Bloomberg) -- Asset managers trying to forestall stricter U.S. oversight appear to have found an ally in the chairman of the Securities and Exchange Commission.
SEC Chair Mary Jo White took up their arguments yesterday, lending support to firms including BlackRock Inc. and Fidelity Investments which are fighting efforts to officially label them sources of “systemic risk” to the financial system.
“I don’t think you are overreacting to the process,” White told industry executives at a conference sponsored by their trade group, the Investment Company Institute.
Asset managers sponsor products such as mutual funds and hedge funds that invest $53 trillion for individuals saving for retirement and institutions such as pension funds. They argue that some proposals under consideration by the Federal Reserve would make mutual funds more expensive and hurt their ability to make the best decisions for investors.
Traditionally regulated by the SEC, the largest firms could come under Federal Reserve oversight if the Financial Stability Oversight Council, an umbrella group of U.S. regulators, decides they require tougher scrutiny because their collapse could trigger broader instability. The council was established by the 2010 Dodd-Frank Act, which sought to prevent a repeat of the 2008 financial crisis.
White, who has a seat on the 10-member council, hasn’t said how she’d vote. Two firms are currently under review: BlackRock, which manages $3.8 trillion worldwide, and Fidelity Investments, which manages $1.9 trillion.