The bills were directed at improving transparency and accountability of the Financial Stability Oversight Council (FSOC), an agency created out of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The FSOC is responsible for designating certain banks and nonbank financial firms as systemically important financial institutions (SIFIs), therefore subjecting those firms to increased regulation.
“Instead of ending ‘Too Big to Fail’ and taxpayer-funded Wall Street bailouts, the Dodd-Frank Act enshrines them into law,” Committee Chairman Jeb Hensarling (R-Texas) said. “Dodd-Frank increases the power and control that largely unaccountable Washington bureaucrats have over our economy. The results have left hardworking taxpayers with fewer choices, higher costs and an anemic economy of shrinking paychecks. The reform bills approved by the committee today will help build a healthier economy for all Americans and put in place needed transparency, accountability and checks and balances on powerful bureaucracies.”
H.R. 3340, also known as the Financial Stability Oversight Council Reform Act, was introduced by Rep. Tom Emmer (R-Minnesota) in July and passed in the House Financial Services Committee this week by a vote of 33 to 24. The bill would make the FSOC and the Office of Financial Research (OFR) more accountable to taxpayers by subjecting the agencies to the Congressional Appropriations process. The bill also requires the OFR to provide a 90-day public notice and comment period before issuing any report, rule, or regulation and creates quarterly reporting requirements for the OFR.
“Today was a win for American consumers,” Emmer said. “Now that we have moved this legislation through the Financial Services Committee, we are one step closer to returning the power of the purse back to Congress where it belongs. If made law, the Financial Stability Oversight Council and the Office of Financial Research will no longer be able to determine their own budgets, instead the American people will have a say through their elected representatives and the congressional appropriations process. I believe in government transparency and the constitutional role of checks and balances, and this bill helps restore these critical principles.”
H.R. 1550, the Financial Stability Oversight Council Improvement Act of 2015, was introduced in March by Reps. Dennis Ross (R-Florida) and John Delaney (D-Maryland). The bill increases transparency of the FSOC and provides institutions with the opportunity to eliminate risk instead of being designated systemically important, according to an announcement from the Committee. H.R. 1550 passed in the Committee by a 44 to 12 vote.
Treasury’s Deputy Assistant Secretary for the FSOC, Patrick Pinschmidt, argued in an op-ed piece on CNBC earlier this week that the proposed changes to the Council “would heavily tip the scales back in Wall Street's favor and leave our country vulnerable to another crisis. These changes would take the council's methodical process and mire it in a series of protracted, bureaucratic steps that would require the council to spend as many as four years studying a company before it could take any action. Some of these proposals would also raise the standard for action by the council to a dangerously high threshold, all but ensuring inaction despite the risk to financial stability. While some argue that these proposals would improve the effectiveness of the FSOC, there should be no mistake: if enacted, these proposals would impede the council's ability to respond to risks in the financial system.”
Click here to see a complete list of bills that passed the Committee in markup.