FSOC Meeting, October 11, 2011
|2nd Proposal Date||Final Rule Issue||Effective Date|
|October 18, 2011||April 3, 2012||May 11, 2012|
The Financial Stability Oversight Council (FSOC) convened a meeting at the U.S. Department of the Treasury on October 11, 2011. Among the topics discussed:
- The second notice of proposed rulemaking and proposed interpretive guidance on the designation and supervision of non-bank financial entities; and
- a presentation of the FSOC budget for fiscal year 2012.
Supervision and Regulation of Certain Nonbank Financial Companies
The council issued an advance notice of proposed rulemaking (ANPR) on October 6, 2010, and a notice of proposed rulemaking (NPR) on January 26, 2011 on the issue of the regulation of nonbank financial companies. In the ANPR, the council requested comment on whether nonbank entities should be supervised and subject to prudential standards. The NPR requested further information, including the specific criteria and analytic framework that the council intends to apply in its final determination.
In this second notice of proposed rulemaking and interpretive guidance, the council provides additional details of the framework for nonbank entity supervision, and requests further comment on the issue. The proposal appeared in the Federal Register on October 18, 2011; the deadline for public comment is December 19, 2011. Under the proposal, the council plans to evaluate nonbank financial firms on certain criteria to determine whether they pose a systemic risk:
- asset size - currently a $50 billion threshold;
- leverage - a ration greater than 15-to-one;
- indebtedness - including $3.5 billion in derivatives-related liabilities or $20 billion of outstanding loans
- interconnectedness - such as insurance companies with $30 billion or more in outstanding credit default swaps
- liquidity concerns - greater than a 10 percent ratio of short-dated debt to total assets.
Related Documents: Federal Register Entry, Supervision and Regulation of Certain Nonbank Financial Companies; FSOC 2012 Budget
- Minutes of the Financial Stability Oversight Council. U.S. Department of the Treasury. Retrieved on October 13, 2011.
- Regulators in U.S. Propose Criteria for Risky Financial Firms. Bloomberg Businessweek. Retrieved on October 13, 2011.