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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