Financial Stability Oversight Council (FSOC) Reform

News Release: FSOC Designation Authority Should Be Eliminated, 06/08/2017

Background: After the 2008 financial crisis, the Dodd-Frank Act created the Financial Stability Oversight Council (FSOC) to identify risks and respond to emerging threats to the nation’s financial stability. FSOC is authorized to identify certain nonbank financial companies and assign them a systemic designation which would make companies subject to supervision by the Federal Reserve Board.    

After review of FSOC’s authority to designate nonbank financial companies as systemically significant, we believe that authority should be repealed. FSOC has used this authority inconsistently and with a lack of transparency. Instead of focusing on individual designations, FSOC’s primary responsibility should be assessing macro-prudential risks to U.S. financial stability. 

In addition, FSOC’s structure should be changed to include state insurance regulators as voting members. The history of FSOC shows that the bank regulator-dominated body discounts the opinions of the single insurance expert voting member, resulting in erroneous and harmful decisions affecting insurance companies. This structural change must also ensure that any FSOC recommendations that would affect insurers must be developed with direct input of state insurance regulators. State insurance regulators, as the primary regulators of insurance, would be the only authorities that could implement these recommendations.

FSOC In The News

MetLife's Systemically Important Case, The Wall Street Journal, 04/28/2017

FSOC is Too Political to be Taken Seriously, American Banker, 04/18/2017

Does ‘Too Big to Fail’ Mean Too Big for the Rule of Law?, The Wall Street Journal, 03/30/2017

Financial Oversight Board's Review Process Cloaked in Mystery, The Hill, 03/30/2017

Mnuchin's MetLife Job, The Wall Street Journal, 02/22/2017

A Trump-Cohn Financial Rewrite, The Wall Street Journal, 02/06/2017

How A Financial Council Republicans Loathe Could Work In Their Favor, The Wall Street Journal, 01/17/2017

Snoopy Takes Regulators to Court, and Wins, The Hill, 06/09/2016

ACLI Commentary: Judge’s Decision Does Not Refute Dodd-Frank, Morning Consult, 05/05/2016

Dodd-Frank Failures Bolster Case for Revamp, American Banker, 05/04/2016

With SIFI Ruling, Regulators Should Re-evaluate MetLife’s Global Status, Reps Say, AM Best, 05/04/2016 

Brave New World for U.S. Financial Stability Council After MetLife, Reuters, 05/03/2016

Congressional Letter Highlights Awkward Consequence of MetLife Case, The Wall Street Journal, 04/11/2016  

Jack Lew's MetLife Tantrum, The Wall Street Journal, 04/08/2016

MetLife CEO Steven Kandarian: The Man Who Beat Uncle Sam, The Wall Street Journal, 04/08/2016

Why MetLife Beat the Government, The Wall Street Journal, 04/07/2016

A Dodd-Frank Watchdog Still Growls, on a Slightly Tighter Leash, The New York Times, 04/01/2016

MetLife’s Big Win for Taxpayers, The Wall Street Journal, 03/30/2016 

MetLife Wins Bid to Shed ‘Systemically Important’ Label, The Wall Street Journal, 03/30/2016

MetLife and the Dodd-Frank Backlash, The Wall Street Journal, 03/30/2016 

Other Resources 

ACLI letter to Treasury Secretary Mnuchin calling for FSOC's authority to designate insurers as systemically significant to be eliminated, 05/24/2017 

ACLI comments on White House directive for examination of risks of designating nonbanks as systemically important, 04/21/2017

ACLI letter to Senate Banking Committee calling to repeal FSOC’s authority to designate insurers as systemically important, 04/12/2017

ACLI letter to Treasury Secretary Mnuchin regarding President's Executive Order, 03/31/2017

ACLI Statement for the Record-House Financial Services Committee Subcommittee on Oversight and Investigation Hearing, 03/28/2017

Senators' letter to Treasury Secretary Mnuchin, seeking review of FSOC procedures regarding SIFI designations, 03/28/2017

ACLI amicus curiae brief supporting MetLife, Inc. v. Financial Stability Oversight Council, 08/25/2016

ACLI Commentary: Judge's Decision Does Not Refute Dodd-Frank, Morning Consult, 05/05/2016

ACLI Statement on Full Opinion to Rescind MetLife's SIFI Designation, 04/07/2016

ACLI President and CEO Governor Kempthorne letter in support of H.R. 4248, 03/08/2016 

NAIC letter in support of H.R. 4248, 02/25/2016

Reps. David Scott (D-GA) and Lynn Westmoreland (R-GA) Dear Colleague letter requesting co-sponsorship of H.R. 4248, February 2016

ACLI President and CEO Governor Kempthorne's testimony to Senate Banking Committee, 07/08/2015

Prudential Financial Executive Vice President & CFO Robert Falzon's testimony to the Senate Banking Committee, 04/30/2015

ACLI Executive Vice President & General Counsel Gary Hughes's testimony to Senate Banking Committee, 03/25/2015