Summary

Requires the Financial Stability Oversight Council (FSOC) to make an initial written determination before voting to designate any U.S. nonbank financial company as systemically important. FSOC must consult with the company and the company’s primary financial regulator and find that other steps (including heightened standards, new standards, or a company plan) are impracticable or insufficient to address the risk before it may vote to designate, and it updates a related cross-reference to reflect the new requirement.

Key Points

• Requires FSOC to make an initial written determination before voting to designate a U.S. nonbank financial company as systemically important.
• Mandates consultation with the company under review and the company's primary federal financial regulator before that determination.
• Mandates that FSOC find other actions (including heightened standards or a company-submitted plan) impracticable or insufficient before voting to designate.
• Updates a technical cross-reference to reflect the new procedural paragraph.
• Adds a formal, documented consideration of alternatives which may lengthen the designation process.
• Gives nonbank companies a required opportunity to consult and to propose mitigation plans prior to a designation vote.
• Does not create new funding, substantive prudential rules, or an explicit effective date.
• Shifts part of the burden toward consultation and potential regulator-led or company-led mitigation rather than immediate Council designation.

Categories & Tags