Speaking on behalf of the Financial Stability Oversight Council Thursday, Treasury Secretary Timothy Geithner made recommendations before the Senate Committee on Banking, Housing, and Urban Affairs. The Council's recommendations include heightened standards and reform for banks and servicers.
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Geithner advised that moving forward, the U.S. must plan for constant change and possible instability in the economy.
Geithner and the committee believe the U.S. economy is already ""in a significantly stronger position and better able to withstand the new risks we face in the global economy.""
The Financial Oversight Council was established by Dodd-Frank and includes members of the agencies responsible for oversight of the financial system, including
[COLUMN_BREAK]the Treasury, Federal Reserve, Securities and Exchange Commission, FDIC, and several others.
The Council recommends reforming the housing finance system, specifically establishing national standards for mortgage servicers, which the committee believes will ""realign incentives and help reestablish confidence in the integrity of the housing market.""
""[T]he Council emphasizes the importance of broader reforms to help return private capital to the housing market, strengthen mortgage underwriting, and reduce over time the role of the government in the housing markets,"" Geithner said.
In addition to national servicing standards, the Council plans to gradually increase capital and liquidity standards for large financial institutions.
Tri-party repo markets and money market funds were also mentioned as specific areas in need of reform.
Geithner stressed the importance of providing adequate funding for enforcement agencies to ensure that new standards are appropriately implemented.
""If we leave the agencies responsible for enforcement underfinanced, then we will leave the American consumers, investors, and businesses that depend on our financial system more vulnerable,"" he warned.
""Although our financial system today is much stronger than it was before the crisis, our work is not complete,"" Geithner said.