“Earlier this year the Treasury Department invited AAF to participate in a roundtable discussion with other think tanks and academics as it researched and wrote its report on banks and credit unions, pursuant to Executive Order 13772. At least three other Treasury reports are due for publication this fall. For the next report, in lieu of further roundtables, however, interested groups and individuals are invited to submit written comments on FSOC-specific matters. Below are written comments from AAF President Douglas-Holtz-Eakin and AAF Director of Financial Services Policy Meghan Milloy to Treasury staff regarding FSOC and recommendations for reform.”

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When it comes to America’s infrastructure, however much we spend never appears to be enough.

On one level at least, that’s understandable. If you’ve ever been frustrated by flight delays, or if you’ve ever taken your life in your hands on Interstate 95 — the East Coast ‘dodge-em’ track judged to be among America’s most dangerous highways — you’ll agree with those who want to boost spending significantly.

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The Financial Stability Oversight Council (FSOC) hosted its first meeting under the Trump administration this week. This super council of federal financial regulators represents but one of the enormous powers granted to the executive branch by the Dodd-Frank Act. In the Trump administration, it may ironically prove to be the most powerful tool to implement the president’s promise to rethink Dodd-Frank, particularly as major financial services reform legislation likely stalls in the Senate.

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The Financial Stability Oversight Council is a political body masquerading as an analytical one. A dubious creation of the Dodd-Frank Act, it reflects that law’s urge to expand the power of bureaucrats, in turn reflecting the implausible credo that they can control “systemic risk” because they know the financial future better than other people. They don’t.

The expected result of a committee of heads of federal agencies chaired by the Treasury secretary is a politicized process. This was undoubtedly the case with the council’s attempt to designate MetLife as a “systemically important financial institution.” It should not be surprising that a U.S. District Court judge threw out the designation, ruling that it was “arbitrary and capricious,” and “hardly adhered to any standard when it came to assessing MetLife’s threat to financial stability.” In dissenting from the council’s action on MetLife, S. Roy Woodall — FSOC’s statutorily-required independent member with insurance expertise — said the designation relied on “implausible, contrived scenarios.”

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Lawmakers ask for review of Financial Stability Oversight Council and its ability to subject nonbank financial firms to stricter oversight.

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The top Republicans on the Senate Banking Committee called on the Treasury Department Tuesday to end the policy of designating non-bank financial companies as Too Big To Fail.

In a letter sent Tuesday, Senator Tom Cotton and nine other Republican Senators urged Treasury Secretary Steven Mnuchin to “use the all tools available” to reverse the Obama administration’s policy of having a federal council designate non-bank financial companies as “systemically important financial institutions,” a designation that brings with it stringent supervision by the Federal Reserve, new capital requirements, and costly regulatory burdens.

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WASHINGTON — A group of 10 Republican senators are calling on Treasury Secretary Steven Mnuchin to drop the government’s appeal of a ruling last year that rejected the insurance giant MetLife’s designation as a systemically risky firm and to dedesignate the only other two nonbanks labeled as a potential threat to the economy.

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Donald Trump meant many things to many voters, but for some, he was the deregulation candidate. He could validate that reputation if he acts soon on a regulatory dispute involving insurance giant MetLife. But he can’t wait too long.

In 2014, the Obama administration’s Financial Stability Oversight Council branded MetLife a too-big-to-fail enterprise, officially a “systemically important financial institution.” This designation placed the company under the regulatory regime of the 2010 Dodd-Frank Act, whose provisions were primarily aimed at the banking industry in an effort to decrease systemic threats to the financial markets.

MetLife challenged the label in January 2015, filing a lawsuit in the U.S. District Court for the District of Columbia. The company argued the classification was improper for a number of reasons. First, it felt that it was targeted due to its size and not the business activities it was engaged in.

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NEW YORK (Thomson Reuters Regulatory Intelligence) – A report by the Republican staff of the powerful U.S. House of Representatives Committee on Financial Services found that the federal Financial Stability Oversight Council acts inconsistently and arbitrarily in exercising its power to designate certain non-bank companies as “too big to fail.”

Based on documents requested by the committee in 2015, and testimony of Treasury Department officials, both obtained as the result of a Congressional subpoena, the report calls the federal interagency council’s analysis is inconsistent. It also accuses the council of failing to follow its own rules.

“Today’s FSOC designations are tomorrow’s taxpayer-funded bailouts. The FSOC typifies Washington’s shadow regulatory system of powerful government bureaucrats, secretive meetings, arbitrary rules and unchecked power to punish enemies and reward friends,” committee Chairman Jeb Hensarling said last year following a court decision rejecting the council’s designation of Metlife as a systemically important financial institution, or SIFI.

The staff report details the non-public analysis associated with FSOC’s processes to designate certain firms as SIFI’s, subject to greater regulatory oversight. It comes in the midst of the FSOC’s appeal of the federal district court decision on MetLife.

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