Sponsors (21)
The bill gives nonbank firms formal opportunities and interagency checks that can reduce unnecessary regulatory burdens, but it risks slowing Council action and allowing systemic risks to persist unaddressed.
Nonbank financial companies can formally present mitigation plans before a designation, giving them a chance to avoid or limit costly Federal Reserve supervision and related expenses.
Financial firms and markets gain an added procedural check that can reduce unnecessary supervisory designations, limiting regulatory disruption for firms and markets and protecting taxpayers from burdensome oversight.
State regulators and federal supervisors will be required to consult with a company's primary regulator, improving interagency coordination and the quality and coherence of oversight decisions.
Taxpayers and financial institutions could face higher short-term stability risk because the new procedures may delay Council action to address imminent systemic threats.
Financial firms and taxpayers may be harmed if procedural hurdles allow firms to postpone or avoid designation, leaving systemic risks unmitigated.
Based on analysis of 2 sections of legislative text.
Requires FSOC to determine, after consulting the company and its regulator, that alternatives are impracticable before voting to designate a U.S. nonbank financial company for Fed supervision.
Amends the Financial Stability Oversight Council (FSOC) designation process to require the Council to first determine — after consulting with the nonbank company and its primary regulator — that alternative measures are impracticable or insufficient before voting to designate a U.S. nonbank financial company for supervision by the Federal Reserve. It conditions the Council’s voting authority on completing that preliminary determination and updates related cross-references. The change adds a mandatory procedural step and formal consultation requirement intended to narrow FSOC’s ability to move directly to designation by ensuring alternatives and company-submitted plans are considered first.
Official title: Financial Stability Oversight Council Improvement Act of 2025
Introduced June 3, 2025 by Bill Foster · Last progress February 11, 2026