Financial Stability Oversight Council (FSOC) Reform

News Release: FSOC designation should be repealed, says ACLI, 04/26/2017

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authority to designate nonbank financial companies as systemically significant, we believe that authority should be repealed.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

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