House Financial Services Committee approved two bills Friday that would change or delay efforts by the Financial Stability Oversight Council to identify emerging risks in the financial system. The 32-27 votes on each bill were split along party lines, with Republicans for and Democrats against passage.
H.R. 4881 calls for a one-year moratorium on the FSOC’s authority to make financial stability determinations. That would allow Congress time to review the process, which bill sponsor Randy Neugebauer, R-Texas, said in a statement was “taking place under a veil of secrecy.”
H.R. 4387, sponsored by Scott Garrett, R-N.J., would open the FSOC meetings to non-members and allow for additional review of designation decisions by agencies whose leaders are on the FSOC. Those agencies are the Treasury Department, Federal Reserve, Consumer Financial Protection Bureau, Securities and Exchange Commission, Federal Deposit Insurance Corp., Commodity Futures Trading Commission, Federal Housing Finance Agency and National Credit Union Administration.
Critics of the bills are pushing for scrutiny of potential risks posed by large money managers. Sheila Bair, chairwoman of the Systemic Risk Council, a group of former government officials and financial experts, wrote to committee leaders that the changes “would undercut a functioning FSOC” whose work is necessary “to address regulatory breakdowns that contributed to the financial crisis.”
Damon Silvers, AFL-CIO director of policy and special counsel, urged committee members to allow the FSOC to consider the role money managers played in the financial crisis. “If asset managers are exempt from disclosure to FSOC as a class, we will have duplicated the sort of Swiss-cheese system of financial regulation and oversight that the Dodd-Frank Act sought to correct,” Mr. Silvers wrote to the committee.
The bills have not been scheduled for a full House vote yet.