April 11, 2011
In her seminal 1957 novel, Atlas Shrugged, Ayn Rand explored the negative effects of governmental overreaching into the private sector. As we now undertake the Herculean task of developing wide-ranging rules for an entire new market structure, we are intensely aware that we must not stifle necessary and legitimate business activity that is critical to the engine of our economy. We don’t want to “shrug,” and topple the globe off our shoulders. At the same time, we need to make sure we’re protecting against systemic risk and providing needed safeguards for markets and consumers. It’s a fine balance, and requires constant review and interaction with those affected by these changes.
Tomorrow, the Commission will hold the 13th in its series of open public meetings on Dodd/Frank rulemakings. We will address what I believe to be one of the more important rulemakings—dealing with margin issues. It’s important, because we need to ensure that the appropriate lines are drawn to protect against market risks, yet not place any unnecessary requirements that could end up harming commercial business activity. In other words, we don’t want to tie up money unnecessarily in margin when that could be better used for natural gas exploration or increased agricultural production, just to name a couple of examples. We need to hear from the market participants affected by these rules, and from all interested parties, to ensure that we get the balance right.
The Dodd/Frank rulemaking efforts have been a remarkably open and iterative process. And never before have those qualities been more important to our regulatory efforts. It is critically important to the outcome of the rules that we continue in this vein. We need to ensure that the “shrug” of these new rules, as will inevitably occur, is an expected bump, and not an earthquake.
Last Updated: April 11, 2011