The Financial Stability Oversight Council (FSOC) is a

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organization, established by Title I of the

Dodd–Frank Wall Street Reform and Consumer Protection Act The Dodd–Frank Wall Street Reform and Consumer Protection Act, commonly referred to as Dodd–Frank, is a United States federal law that was enacted on July 21, 2010. The law overhauled financial regulation in the aftermath of the Great Recess ...

, which was signed into law by

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on July 21, 2010. The

Office of Financial Research The Office of Financial Research (OFR) is an independent bureau within the United States Department of the Treasury that was established by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative ...

is intended to provide support to the council. The Dodd-Frank Act provides the Council with broad authorities to identify and monitor excessive risks to the U.S.

financial system A financial system is a system that allows the exchange of funds between financial market participants such as lenders, investors, and borrowers. Financial systems operate at national and global levels. Financial institutions consist of complex, ...

arising from the distress or failure of large, interconnected

bank holding companies A bank holding company is a company that controls one or more banks, but does not necessarily engage in banking itself. The compound bancorp (''banc''/''bank'' + '' corp ration') is often used to refer to these companies as well. United State ...

or non-bank financial companies, or from risks that could arise outside the financial system; to eliminate expectations that any American financial firm is "

too big to fail "Too big to fail" (TBTF) and "too big to jail" is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the great ...

"; and to respond to emerging threats to U.S. financial stability. The Act also designates the

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as Chairperson. Inherent to the FSOC's role as a consultative council is facilitation of communication among financial regulators. The FSOC has the authority to set aside certain financial regulations published by the

Consumer Financial Protection Bureau The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mortg ...

if those rules would threaten financial stability.

Purpose and duties

At minimum, it must meet quarterly. Specifically, there are three purposes assigned to the Council: # identify the risks to the financial stability of the United States from both financial and non-financial organizations # promote market discipline, by eliminating expectations that the Government will shield them from losses in the event of failure # respond to emerging threats to the stability of the US financial system

Activities

On July 26, 2011, the First Annual Financial Stability Oversight Council Report was issued by the Council fulfilling the Congressional mandate to report on the activities of the Council. The Report is intended to describe significant financial market and regulatory developments, analyze potential emerging threats, and make certain recommendations. The July 26, 2011 report warned that the United States faces potential losses connected with the European debt crisis. In September 2014, a group of Republican lawmakers accused U.S. regulators of "disparate treatment" of nonbank financial firms currently considered for tougher oversight. The lawmakers stated that the regulators should conduct the same level of analysis and due diligence for the insurance industry as it has for the asset management industry before formally considering whether to designate another insurance company. After much anticipation and debate about whether FSOC would and should designate individual asset managers (a nonbank financial firm) as systemically important financial institutions (SIFIs) which would subject them to greater oversight, FSOC announced in August, 2014, that rather than designating individual asset managers as SIFIs, it would focus on examining systemic risk posed by asset managers' products, and activities. As a result of FSOC's announcement the Securities and Exchange Commission is now expected and assumed to take a prudential supervisory role of individual asset managers, in addition to exercising its traditional mandate of investor protection. Since the inception of FSOC, the Council has designated select financial market utilities (FMUs) as "systemically important." The designation of systemically important subjects the FMU to enhanced regulatory oversight. The three supervisory agencies charged with regulating systemically important FMUs are: the Federal Reserve Board, Securities and Exchange Commission, and Commodity Futures Trading Commission.

Resources

The

Federal Advisory Committee Act The Federal Advisory Committee Act (FACA) (), is a United States federal law which governs the behavior of federal advisory committees. In particular, it has special emphasis on open meetings, chartering, public involvement, and reporting. The U.S. ...

, which limits the powers of advisory committees, does not apply to the council. The council has an almost unlimited budget in that the Council may draw on virtually any resource of any department or agency of the federal government. Any employee of the federal government may be detailed to the Council without reimbursement and without interruption or loss of civil service status or privilege. Any member of the Council who is an employee of the federal government serves without additional compensation. In addition, "An employee of the Federal Government detailed to the Council shall report to and be subject to oversight by the Council during the assignment to the Council, and shall be compensated by the department or agency from which the employee was detailed." Additionally, "Any expenses of the Council shall be treated as expenses of, and paid by, the Office of Financial Research".

Authority

The Council has very broad powers to monitor, investigate and assess any risks to the US financial system. The Council has the authority to collect information from any state or federal financial regulatory agency, and may direct the

, which supports the work of the Council, "to collect information from bank holding companies and nonbank financial companies". The Council monitors domestic and international regulatory proposals, including insurance and accounting issues, and advises Congress and the Federal Reserve on ways to enhance the integrity, efficiency, competitiveness and stability of the US financial markets. On a regular basis, the Council is required to make a report to Congress describing the state of the U.S. financial system. Each voting member of the Council is required to either affirm that the federal government is taking all reasonable steps to assure financial stability and mitigate systemic risk, or describe additional steps that need to be taken. Under specific circumstances, the Chairman of the Council (who is also the Secretary of the Treasury), with the concurrence of 2/3 voting members, may place nonbank financial companies or domestic subsidiaries of international banks under the supervision of the Federal Reserve if it appears that these companies could pose a threat to the financial stability of the US. The Federal Reserve may promulgate safe harbor regulations to exempt certain types of foreign banks from regulation, with approval of the Council. Under certain circumstances, the Council may provide for more stringent regulation of a financial activity by issuing recommendations to the primary financial regulatory agency, which the primary financial agency is obliged to implement – the Council reports to Congress on the implementation or failure to implement such recommendations.

Financial reporting to the Council

The Council may require any bank or non-bank financial institution with assets over $50 billion to submit certified reports as to the company's: * financial condition * systems in place to monitor and control any risks * transactions with subsidiaries that are regulated banks * the extent to which any of the company's activities could have a potential disruptive impact on financial markets or the overall financial stability of the country The

Comptroller General of the United States The Comptroller General of the United States is the director of the Government Accountability Office (GAO, formerly known as the General Accounting Office), a legislative-branch agency established by Congress in 1921 to ensure the fiscal and man ...

may audit the Council or anyone working for the Council, and may have access to any information under the control of or used by the Council.

Review 2017

On April 21, 2017, President

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signed one

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: 13789; and two

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: Orderly Liquidation Authority Review and

Financial Stability Oversight Council The Financial Stability Oversight Council (FSOC) is a United States federal government organization, established by Title I of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Barack Obama on ...

to review the Council and parts of the

Organization

Voting members

The Financial Stability Oversight Council has ten voting members: #

(chairs the Council) #

Chairman of the Federal Reserve The chair of the Board of Governors of the Federal Reserve System is the head of the Federal Reserve, and is the active executive officer of the Board of Governors of the Federal Reserve System. The chair shall preside at the meetings of the Boa ...

Comptroller of the Currency The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all nationa ...

# Director of the

# Chairman of the

U.S. Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...

# Chairman of the

Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures cr ...

# Chairman of the Commodity Futures Trading Commission # Director of the

Federal Housing Finance Agency The Federal Housing Finance Agency (FHFA) is an independent federal agency in the United States created as the successor regulatory agency of the Federal Housing Finance Board (FHFB), the Office of Federal Housing Enterprise Oversight (OFHEO), ...

# Chairman of the

National Credit Union Administration Board The National Credit Union Administration (NCUA) is a government-backed insurer of credit unions in the United States, one of two agencies that provide deposit insurance to depositors in U.S. depository institutions, the other being the Federa ...

# an independent member (with insurance expertise), appointed by the President

Current voters

Non-voting Members

There are five non-voting members: # Director of the

(an independent agency within the Treasury Department and established by the Dodd-Frank Act): Dino Falaschetti # Director of the Federal Insurance Office (part of the Treasury Department and established in this Act): Steven E. Seitz # a state insurance commissioner, to be designated by a selection process determined by the state insurance commissioners (2-year term): Maine Superintendent Eric Cioppa delegate to the FSOC. # a state banking supervisor, to be designated by a selection process determined by the state banking supervisors (2-year term): Charles G. Cooper, Commissioner of the Texas Department of Banking. # a state securities commissioner (or officer performing like function) to be designated by a selection process determined by such state security commissioners (2-year term): Melanie Senter Lubin, Maryland Securities Commissioner.

References

External links

*
Financial Stability Oversight Council
in the

Federal Register The ''Federal Register'' (FR or sometimes Fed. Reg.) is the official journal of the federal government of the United States that contains government agency rules, proposed rules, and public notices. It is published every weekday, except on feder ...

Understanding Derivatives: Markets and Infrastructure Federal Reserve Bank of Chicago
Financial Markets Group {{Authority control Financial regulatory authorities of the United States Great Recession in the United States Systemic risk United States Department of the Treasury 2010 establishments in the United States

Purpose and duties

Activities

Resources

Authority

Financial reporting to the Council

Review 2017

Organization

Voting members

Current voters

Non-voting Members

See also

References

Further reading

External links