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H.R. 4061 (115th): Financial Stability Oversight Council Improvement Act of 2017


H.R. 4061 amends the Dodd-Frank Act to require the Financial Stability Oversight Council (FSOC), when determining whether to subject a U.S. or a foreign nonbank financial company to supervision by the Federal Reserve, to consider the appropriateness of imposing heightened prudential standards as opposed to other forms of regulation to mitigate identified risks to U.S. financial stability.

Specifically, the bill directs the FSOC to reevaluate, both annually and periodically, final determinations of systemic risk regarding a nonbank financial company under Fed supervision. Where a reevaluation determines that a nonbank financial company no longer poses a threat to the financial stability of the United States, which two-thirds of the FSOC must affirm, the FSOC shall rescind the determination. As the FSOC makes it determinations, the legislation prescribes they must provide written notification, provide an opportunity to submit written materials to the FSOC as part of an initial evaluation, provide an opportunity to meet with the FSOC to discuss the analysis, and provide disclosure of the public sources of information considered by the FSOC as part of its analysis.

Finally, the bill directs the FSOC to study the impacts of its determinations to subject nonbank financial companies to Fed supervision and prudential standards and whether such determinations have the intended result of improving domestic financial stability every five years.

Last updated Apr 29, 2018. Source: Republican Policy Committee

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Apr 11, 2018.


Financial Stability Oversight Council Improvement Act of 2017

(Sec. 2) This bill amends the Financial Stability Act of 2010 to require the Financial Stability Oversight Council, in determining whether a nonbank financial company shall be designated as systemically important and consequently be supervised by the Federal Reserve Board and subject to prudential standards, to consider the appropriateness of imposing such standards as opposed to other forms of regulation to mitigate identified risks to U.S. financial stability.

The bill revises procedural requirements related to council determinations of systemic importance. Specifically, the council must: (1) provide an opportunity, during an annual reevaluation of such a determination for a nonbank financial company, for the company to submit written materials to, and meet with, the council in order to contest the determination; (2) every five years, upon request by a nonbank financial company, reevaluate such a determination and hold a vote on whether to rescind it; and (3) undertake certain procedures for initial evaluations.

(Sec. 4) The bill amends the Federal Reserve Act to lower the maximum allowable amount of surplus funds of the Federal Reserve banks.