House Bill Would Open Up FSOC Designation of Non-Bank SIFIs

A bi-partisan House bill would make more transparent the designation of asset managers, hedge funds and other non-bank actors as systemically important financial institutions (SIFIs) by the Financial Stability Oversight Council (FSOC). Introduced by Rep. Dennis Ross (R-FL), the FSOC Improvement Act, H.R. 5180, would require the Council to involve the firm or fund’s primary regulatory prominently in the SIFI designation process. The Council would have to determine that the firm’s primary regulator has not taken proposed or adopted regulations or taken other regulatory action that would mitigate or prevent the identified risk. In addition, FSOC would have to provide the non-bank financial company with written notice of a proposed determination, including an explanation of the basis of the proposed determination of the Council that the firm is a systemically important financial institution and a detailed explanation of why other regulatory action by the company's primary financial regulator agency, if any, is insufficient to mitigate or prevent such risk.