WASHINGTON, D.C. – Aiming to curb the increasingly partisan and unchecked authority of financial regulators, Congressman Tom Emmer (MN-06) reintroduced the Financial Stability Oversight Council Reform Act. This legislation will bring the FSOC under congressional appropriations and oversight, which is designed to help increase transparency, restore accountability, and protect American innovation. The Financial Stability Oversight Council Reform Act is cosponsored by Representatives French Hill (AR-02), Young Kim (CA-40), Bill Posey (FL-08), Pete Sessions (TX-17), Blaine Luetkemeyer (MO-03), Scott Fitzgerald (WI-05), Barry Loudermilk (GA-11), Byron Donalds (FL-19), Andy Barr (KY-06) and John Rose (TN-06).
“Under President Biden, the Financial Stability Oversight Council has morphed into a political weapon for the administrative state,” said Emmer. “Strong financial markets require transparent regulators. By restoring the congressional oversight process, we will ensure that the FSOC is acting in the best interest of the American economy and not on the political whims of the Biden administration.”
The proposed legislation would give Congress the authority to approve the budget for the FSOC and the Office of Financial Research (OFR), create quarterly reporting requirements for the OFR and require the OFR to provide at least 90 days for a public notice and comment period before issuing any report, rule or regulation. This increased transparency would ensure the FSOC’s independence and support safe and competitive financial markets.
Background
The Financial Stability Oversight Council (FSOC) was established in 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act as an interagency body comprised of the heads of United States’ financial regulators. Its purpose is to identify and address potential threats to U.S. financial stability. The FSOC has the authority to designate both banks and nonbanks as systemically important financial institutions (SIFI) and subject them to greater regulatory scrutiny by the Federal Reserve. The Office of Financial Research (OFR) is an independent bureau tasked with supporting the FSOC and its member agencies with research.
In recent years, the White House has shown a willingness to use the FSOC to implement their priorities on stablecoin regulation and the insurance business without authorization from Congress. The FSOC wields considerable authority in designating certain financial institutions and industries as "systemically important," thereby subjecting them to heightened regulatory scrutiny.
The Financial Stability Oversight Council Reform Act is supported by the Small Business & Entrepreneurship Council, the Bank Policy Institute and the Securities Industry and Financial Markets Association.
Text of the Financial Stability Oversight Council Reform Act is available here.
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