FSOC Designation: Is the Cart Outrunning the Horse?
The Financial Stability Oversight Council (FSOC) under the authority of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the Financial Stability Board (FSB) under the authority of the G-20, have designated companies as systemically important financial institutions (SIFIs) and global systemically important financial institutions (G-SIFIs). Once designated by the FSOC in the U.S., the companies are subject to yet-to-be-determined heightened prudential regulation by the Federal Reserve Board.
The FSOC and the FSB are in various stages of considering the eligibility of nonbank financial companies, broker-dealers, asset managers and funds as SIFIs and G-SIFIs.
In a recent interview with Bloomberg BNA’s Richard Cowden, partner Thomas P. Vartanian highlighted several issues related to the FSOC designation, suggesting the need to consider whether the process sets into motion a regulatory process that is not based on empirical precedent and a broad analysis of the consequences of designation.
Tom also serves on the Advisory Board of the Bloomberg BNA Banking Report – a distinguished panel of practitioners and policy experts from across the spectrum of banking law.
View the full interview.