A non-partisan think tank has warned that the U.S. government is not doing enough to address "significant gaps" in supervision required to maintain a stable financial system.
"There is a risk that stability issues will be neglected in any reforms pursued via Congress or the regulatory agencies," reads the letter from the Systemic Risk Council's Sir Paul Tucker, chair of the group and the former deputy governor of the Bank of England.
The council is concerned that, while the Treasury reports make a series of useful recommendations that are generally relevant to financial stability, they still "do not give enough attention to the importance of resilience in capital markets, asset management and insurance."
The letter explains that U.S. policymakers should contemplate market stability in the context of maintaining the provision of financial services in the midst of big shocks, rather than whether booms and busts can be avoided.
"Choice, efficiency and economic growth are hard to maintain if an economy cannot rely on the availability of core financial services through thick and thin," the letter reads. "Early-warning systems are unlikely to be sufficiently robust given the range of forces that can knock the economy off course or bring down key intermediaries."
The council argues that the debate over resiliency has mostly applied to banks and some counterparty clearing houses, while excluding markets and activities, as happened during the run-up to the Great Recession.
"It risks unelected policymakers seeing their task in terms of macro-credit cycles rather than as embracing the need to ensure that core services could withstand a wide range of shocks, including cyberattacks," the letter states.