Financial Stability Oversight Council Adopts Supplemental Procedures Relating to SIFI Determinations
The U.S. Financial Stability Oversight Council (“Council”) has now formally responded to increasing concerns regarding the process by which it considers whether to designate a nonbank financial company as a systemically important nonbank financial company (“SIFI”). In November 2014, the Government Accountability Office recommended that the Council take a series of steps to strengthen its process for evaluating companies for potential designation and to provide additional information to the public regarding the designation process.1 Council staff has been meeting with interested parties, including our firm, to discuss potential enhancements to its designation process.
Suggestions have dealt with the fairness of the administrative process, the timeliness of notifications to companies, the extent to which companies are permitted to participate in and understand the record being developed, the consultative process with other regulators and the process for annual reviews of SIFI designations. Meetings have not focused on the quality or substantiation of the Council’s deliberative processes.
On February 4, 2015 the Council announced that it has adopted supplemental procedures regarding SIFI determinations, which include the following elements.