Senator
David Vitter (R-La.) and Rep. Scott Garrett (R-N.J.) have introduced companion bills
in the Senate, S 3497, and House, HR 6317, that would remove the authority of the
Financial Stability Oversight Council to designate insurance companies, hedge
funds and other non-bank financial institutions as systemically important
financial institutions under Title 1 of the Dodd-Frank Act. As required by
Dodd-Frank, the FSOC published a rule that would designate non-bank financial companies
as systemically important financial institutions. According to Senator Vitter
and Rep. Garret, the rule is unclear and provides no understanding about what
standards will be used to make these designations. Non-bank financial companies
chosen by the FSOC will be subjected to enhanced regulation by the Federal
Reserve Board. In recent testimony before the House Financial Services
Committee, Treasury Secretary Tim Geithner indicated that the FSOC designations
of non-bank financial institutions as systemically important would happen this
year. Senator Vitter is a member
of the Banking Committee and Rep. Garret is Chair of the House Capital Markets
Subcommittee.