Financial Stability Oversight Council (FSOC) Reform

Background

In 2010, 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.    

Though FSOC is required to conduct an annual review of these designations, current procedures are not detailed and comprehensive enough to provide clear opportunities to reduce systemic risk. Despite some limited reforms undertaken by FSOC, the existing reevaluation and rescission process is incomplete, lacks meaningful transparency, and conflicts with the Dodd-Frank Act’s goal of diminishing systemic risk in the financial system.

ACLI supports efforts to strengthen standards applied by FSOC in its designations as well as attempts to establish procedural safeguards to promote transparency and ensure a fair process.

FSOC should also consider the consequences of designation. The additional regulation imposed upon a designated company can place that company at a significant competitive disadvantage relative to its non-designated competitors.

FSOC in the news

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