WASHINGTON, D.C. – This week, U.S. Senators Thom Tillis (R-NC), Mike Rounds (R-SD), Tom Cotton (R-AR), and David Perdue (R-GA) wrote a letter to Secretary of the Treasury Steven Mnuchin requesting an update on the progress being made by the Financial Stability Oversight Council (FSOC) to reform the systematically important designation process for nonbank financial companies. In November of 2017, the U.S. Department of the Treasury maderecommendations on ways to improve FSOC’s designation processes for nonbank financial companies.
Passage of Dodd-Frank in 2010 established FSOC with the authority to determine that certain nonbank financial companies shall be supervised by the Federal Reserve and subject to enhanced prudential standards. This additional oversight and regulation, including capital requirements and a mandate to submit living wills to the Federal Reserve and FDIC, pose burdensome compliance costs on companies with the designation.
To address concerns about transparency and the analytical process FSOC applies in making decisions about particular firms, the U.S. Treasury recommended in their report that FSOC prioritize its efforts to address risks to financial stability through a process that emphasizes an activities-based or industry-wide approach and implement a process for assessing and addressing potential risks to financial stability.
“We are grateful for the work of you and your staff on the Treasury Department’s November 2017 Report of Financial Stability Oversight Council Designation,” wrote the Senators. “While we still agree that Congress should make statutory changes, in the interim we believe meaningful reforms can and should be made administratively. Now that we have exceeded the one-year anniversary of the Report’s publication, we would value an update on the implementation of the recommended reforms.”
Click HERE to read the letter.
Passage of Dodd-Frank in 2010 established FSOC with the authority to determine that certain nonbank financial companies shall be supervised by the Federal Reserve and subject to enhanced prudential standards. This additional oversight and regulation, including capital requirements and a mandate to submit living wills to the Federal Reserve and FDIC, pose burdensome compliance costs on companies with the designation.
To address concerns about transparency and the analytical process FSOC applies in making decisions about particular firms, the U.S. Treasury recommended in their report that FSOC prioritize its efforts to address risks to financial stability through a process that emphasizes an activities-based or industry-wide approach and implement a process for assessing and addressing potential risks to financial stability.
“We are grateful for the work of you and your staff on the Treasury Department’s November 2017 Report of Financial Stability Oversight Council Designation,” wrote the Senators. “While we still agree that Congress should make statutory changes, in the interim we believe meaningful reforms can and should be made administratively. Now that we have exceeded the one-year anniversary of the Report’s publication, we would value an update on the implementation of the recommended reforms.”
Click HERE to read the letter.
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