A Republican congressman and a Democratic colleague have introduced a bill to shed more light on the workings of the Financial Stability Oversight Council, which watches for emerging threats to market stability.
The draft bill by Florida Republican Dennis Ross and Maryland Democrat John Delaney was introduced on Monday and formally announced on Tuesday— just a day before Treasury Secretary Jack Lew is slated to testify in the Senate about the latest efforts to improve transparency for the panel.
The council, which Lew chairs, is a body of regulators created by the 2010 Dodd-Frank law. It has the power to designate large financial firms as systemically important – a tag that carries capital requirements and greater oversight by the Federal Reserve.
The panel has already designated GE Capital, American International Group, Prudential and Metlife as systemically important firms. Metlife is fighting the designation in a federal court.
In addition, the council is exploring the activities and products offered by asset managers such as BlackRock and Fidelity to see if any may pose risks. Wednesday marks the last day that the panel will be accepting public feedback on its review of the asset management industry.
Critics have accused the council of being shrouded in secrecy. Many of its meetings are conducted behind closed doors, and few details are often made public.
In addition, companies that are being considered for designation have often complained they are not given enough notice so that they may submit materials and make their case to the panel on why they should not face greater oversight.
In response to some of these critiques, the council has taken some steps to improve its policies and procedures.
Earlier this year, it adopted changes to provide firms with more notice when they are being weighed for designation as systemically important, offer more transparency to the broader public, and improve the process of its annual re-evaluation of prior designations.
The bill introduced on Tuesday is somewhat similar to one the two lawmakers put forward last year.
A spokeswoman for Ross said the bill would essentially codify some of the changes the council recently made into law, including a requirement that it give companies more notice when they are being reviewed.
A Treasury spokeswoman did not have any immediate comment on the draft bill.
(Reporting by Sarah N. Lynch)
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