Financial Stability Oversight Council
|Financial Stability Oversight Council|
|Effective Date, Reg. HH||Proposed Amendment||2nd Proposed Amendment|
|September 14, 2012||March 4, 2013||January 22, 2014|
|2nd Proposal Date||Final Rule Issue||Effective Date|
|October 18, 2011||April 3, 2012||May 11, 2012|
|Proposal Date||Final Rule Issue||Effective Date|
|March 28, 2011||July 27, 2011||August 26, 2011|
|Notice Date||Effective Date||Comment Deadline|
|May 22, 2012||May 22, 2012||July 30, 2012|
As established under Title I of the Dodd-Frank Act, the Financial Stability Oversight Council (FSOC) provides, for the first time, comprehensive monitoring to ensure the stability of our nation's financial system. It was passed by the House Financial Services Committee on December 2, 2009 to put an end to “too big to fail” financial firms. It was created as a nine-member council, led by the Treasury secretary, to look out for systemic risks. The FSOC will subject to Fed oversight any nonbank financial companies whose financial distress would pose risks to the financial stability of the United States.
The Council, which held its inaugural meeting on October 1, 2010, is charged with identifying threats to the financial stability of the United States, promoting market discipline and responding to emerging risks to the stability of the United States financial system. The FSOC has subsequently met periodically to discuss the state the global macroeconomic environment, and to create a framework for the monitoring of systemic risks via rulemakings.
As of May 2012, the council has finalized two rulemakings, on nonbank financial companies and financial market utilities (see below). The council expects that, be the end of 2012, it would release its list of entities that would be deemed "systemically important." On May 22, 2012, the FSOC approved its initial list of clearing houses that would carry the designation. While the list was not made public, several of the large clearing houses have publicly stated that they had received preliminary designation as systemically important. 
Clearing Organizations and SIFIs
- CME Group
- Options Clearing Corporation
- Depository Trust and Clearing Corporation
- The Clearing House Payments Company
- National Securities Clearing Corp.
- CLS Bank International
- Fixed Income Clearing Corp
Non-bank Systemically Important Financial Institutions (SIFIs)
As of September 2014, the FSOC has identified four non-bank financial firms as systemically important:
- GE Capital
- Prudential Financial
- American International Group (AIG)
- Metropolitan Life Insurance (MetLife)
Any such systemically important nonbank financial company or financial market utility would be subject to heightened risk management, financial resource, and other standards, but would also gain access to the Federal Reserve's emergency lending facilities. Any entity designated as systemically important has the right to a hearing; FSOC hearing procedures were released on May 22, 2012.
Notice of Availability; Request for Comment
- Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies, April 3, 2012
- Authority to Designate Financial Market Utilities as Systemically Important, July 18, 2011
- Assessment Fees on Large Bank Holding Companies and Nonbank Financial Companies, December 29, 2011
- Supervision and Regulation of Certain Nonbank Financial Companies, October 11, 2011 See Final Rule Above
- Financial Market Utilities Notice of Proposed Rulemaking (NPRM) See Final Rule Above
Note: As systemic risks and the FSOC's rulemakings related to the 2008 financial crisis subsided, the council's meetings in 2013-14 have been mostly procedural. For an overview of these meetings and links to the meetings' minutes, click HERE. Earlier meetings are detailed below.
- July 18, 2012 - 2012 Annual Report
- April 3, 2012
- On February 1, 2012, 2011, the Council held a closed-door meeting to discuss the macro-environment in Europe, reform efforts for money market funds, and the public comments from proposed rulemaking on non-bank financial entities. The minutes from the meeting can be found HERE.
- On December 21, 2011, the Council held a closed-door meeting to discuss the advancement of certain FMUs to "Stage 2," which will subject such institutions to heightened reporting and capital requirements. The minutes from the meeting can be found HERE.
- On December 5, 2011, the Council held a closed-door meeting to discuss European market developments, Dodd-Frank coordination, and an update on FMUs. The minutes can be found HERE.
- On November 11, 2011, the Council held a closed-door meeting to discuss European market developments. A list of attendees can be found HERE.
- October 11, 2011
- Between the July and October meetings, the council met twice, on August 8 and again on September 15, to discuss "market developments in light of increased market volatility and European market developments." These meetings were held entirely in executive session, giving members an opportunity to update each other on issues of systemic importance.
- July 18, 2011
- July 13, 2011 - 2011 Annual Report
- May 24, 2011
- March 17, 2011
- January 18, 2011
- November 23, 2010
- October 1, 2010
- Office of Financial Research: Asset Management and Financial Stability - September 2013
- Report to the Congress on Secured Creditor Haircuts - July 2011
- Macroeconomic Effects of Risk Retention Requirements - January 2011
- Study & Recommendations on Prohibitions on Proprietary Trading & Certain Relationships with Hedge Funds & Private Equity Funds - January 2011 (see: Volcker Rule)
- Study & Recommendations Regarding Concentration Limits on Large Financial Companies - January 2011
Dodd-Frank Integrated Implementation Roadmap
This presentation provides a summary of key tasks that the FSOC will perform as part of implementing the Dodd-Frank Act.
The report includes analysis of issues by FOSC and its members agencies such as:
- Constraining risks to financial stability
- Resolution plans and orderly liquidation authority
- Consumer and investor protection
- Tansparency and accountability in financial markets
- Reforms to strengthen regulatory agencies
It also addresses time lines for various offices and issues including:
- Monitoring Systemic Risk - by FSOC and the Office of Financial Research
- Oversight of large, interconnected financial companies
- Systemic financial market utilities, and payment, clearing and settlement activities
- Constaining activities and size of financial institutions
- Resolution plans and Orderly Liquidation Authority
- Consumer Financial Protection Bureau
- Corporate governance and compensation
- OTC regulation
- Credit agencies
- Hedge fund advisor registration and oversight
- Agency changes, mergers
The Council’s bylaws set forth the manner and procedures by which that body will be governed. They provide for a collaborative governance structure that promotes accountability for the work of the Council.
Members Present at Inaugural Meeting, October 1, 2010
- Timothy F. Geithner, Secretary of the Treasury and Chairperson of the Financial Stability Oversight Council
- Sheila Bair - Chairperson, Federal Deposit Insurance Corporation
- Ben Bernanke, Chairman, Board of Governors of the Federal Reserve System
- Edward DeMarco, Acting Director, Federal Housing Finance Agency
- Gary Gensler, Chairman, Commodity Futures Trading Commission
- Debbie Matz, Chairman, National Credit Union Administration
- Mary Schapiro, Chairman, Securities and Exchange Commission
- John Walsh, Acting Comptroller of the Currency
- William Haraf, Commissioner, California Department of Financial Institutions (non-voting member)
- John Huff, Director, Missouri Department of Insurance, Financial Institutions, and Professional Registration (non-voting member)
- David Massey, Deputy Securities Administrator, North Carolina Department of the Secretary of State, Securities Division (non-voting member)
- All eyes on watchdogs to give financial reforms bite. The Financial Times. Retrieved on July 13, 2010.
- Initiatives. U.S. Department of the Treasury. Retrieved on January 6, 2011.
- U.S. risk council identifies initial set of clearinghouses. Reuters. Retrieved on May 23, 2012.
- Regulators Designate Swaps Clearinghouses Systemic. Bloomberg. Retrieved on May 23, 2012.
- OCC Received Proposed Systemic Designation From U.S. Regulators. BloombergBusinessweek. Retrieved on May 24, 2012.
- 8 tagged as potential threats to financial system. CNBC. Retrieved on July 19, 2012.