House Financial Services Committee Hearing: “Examining the Dangers of the FSOC’s Designation Process and Its Impact on the U.S. Financial System”

The House Financial Services Committee held a hearing examining the process by which the Financial Stability Oversight Council (“FSOC”) designates nonbank financial institutions as systemically important financial institutions (“SIFIs”).  Specifically, the hearing focused on the voting structure of FSOC and the criteria it uses to make certain designations, as well as the future implications of subjecting bank holding companies with assets of $50 billion or more to stringent standards. 

The hearing also discussed the FSOC Transparency and Accountability Act (H.R. 4387), which would amend, among other things, Dodd-Frank Section 111 (“Financial Stability Oversight Council Established”) to make FSOC subject to the Sunshine Act and the Federal Advisory Committee Act and allow all members and boards represented on FSOC to attend and participate in FSOC meetings.

The following witnesses testified at the hearing:

  • Paul S. Atkins, Chief Executive Officer, Patomak Global Partners (written testimony)
  • F. William McNabb, Chairman and Chief Executive Officer, Vanguard, on behalf of the Investment Company Institute (written testimony)
  • Eugene Scalia, Partner, Gibson, Dunn & Crutcher (written testimony)
  • Michael S. Barr, Professor of Law, University of Michigan Law School (written testimony)
  • Deron Smithy, Treasurer, Regions Bank, on behalf of the Regional Bank Coalition (written testimony)
  • Peter J. Wallison, Arthur F. Burns Fellow in Financial Policy Studies, American Enterprise Institute (written testimony)

See: Committee Memorandum; Archived Webcast of Hearing.
Related news: FSOC Public Conference on Asset Management (May 21, 2014); House Financial Services Committee Chairman Calls on FSOC to Cease and Desist (May 21, 2014); SIFMA Says Asset Managers Do Not Pose Systemic Risk (May 7, 2014); SIFMA AMG Submits Comments to the FSB on Assessment Methodologies for Identifying Non-Bank Non-Insurer G-SIFIs (April 7, 2014); SIFMA AMG Submits Comments to the FSB and SEC in Response to OFR Study and with Regard to Separate Accounts (April 8, 2014); SEC Commissioner Gallagher Submits Comment Letter in Opposition to FSOC Process (May 16, 2014); House Financial Services Subcommittee Chairmen Send Letter to FSB and FSOC Requesting Information on Methodologies Used to Designate G-SIFIs (May 12, 2014).