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The Center for American Progress submitted comment letters to the Financial Stability Oversight Council on their proposed analytic risk framework and guidance on nonbank financial company designations.
Building an Economy for All, Economic Development and Governance, Finance Reform, Trump Administration+1 More
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On April 21, 2023, the Financial Stability Oversight Council (FSOC) issued two proposals that will improve the FSOC’s ability to manage threats to the financial system. The first proposal establishes a framework for how the council identifies, assesses, and addresses risks to financial stability. The second proposal clarifies the FSOC’s procedures for designating certain nonbank financial companies for enhanced oversight by the Federal Reserve. The proposed guidance would also remove the inappropriate barriers to the designation process imposed under the Trump administration.
The FSOC was established by Congress under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) following the financial crisis of 2007–2008. Dodd-Frank granted the FSOC broad authority to monitor and respond to financial stability risks. The ability to designate nonbanks is among the council’s most powerful tools authorized by the statute and proved critical in the aftermath of the crisis. As financial actors endure economic shocks, such as those from climate disasters and the COVID-19 pandemic, the financial system must be more resilient than ever, and the FSOC must have access to its full set of tools to maintain financial stability. CAP commends the FSOC for issuing these important proposals.
Click here to read CAP’s comment letter on the FSOC analytic framework.
Click here to read CAP’s comment letter on the FSOC’s nonbank designations.
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