Members of the Financial Stability Oversight Council came under scrutiny during a House Financial Services Committee hearing Tuesday.
“FSOC is clearly one of the most powerful federal entities to ever exist and, unfortunately, also one of the least transparent and least accountable as well,” committee Chairman Jeb Hensarling, R-Texas, said in an opening statement. Designation of systemically important financial institutions is the most controversial FSOC activity, Mr. Hensarling said.
FSOC members represent nine federal financial regulators, including the Securities and Exchange Commission, represented by SEC Chairwoman Mary Jo White, who told the committee that one area of focus for the council is potential risks within the asset management industry. In December 2014, FSOC officials asked for public comment on those risks, “and the staff's analytical work in this area continues,” Ms. White said at the hearing. Increased transparency of the FSOC process is “an important focus,” Ms. White said.
The FSOC 2015 annual report identified several areas for continued attention, including cyberattacks, liquidity and market function, counterparty risks, and gaps in data on financial markets and institutions.
Ranking member Maxine Waters, D-Calif., said at the hearing that some of the FSOC criticism came from colleagues who “seem to have caught a convenient case of amnesia about this important mandate. … This work is central to preventing the types of contagion and risk that nearly crashed Main Street just seven years ago.”