Summary

Requires the Financial Stability Oversight Council (FSOC) to make a formal initial determination — after consulting the nonbank company and that company’s primary financial regulator — that alternative actions are impracticable or insufficient before the Council may vote to designate a U.S. nonbank financial company for supervision by the Federal Reserve. Also updates a related cross-reference to reflect the new procedural requirement. The change adds a pre-vote consultative and procedural step that narrows the Council’s existing designation process, but does not change the substantive standards for designation or provide new funding or timelines.

• Adds a required initial determination that alternatives are impracticable or insufficient before FSOC may vote to designate a nonbank for Fed supervision.
• Requires consultation with the nonbank company and its primary financial regulator prior to a designation vote.
• Specifies examples of alternative actions to consider, including agency actions, heightened standards, or a company-submitted plan.
• Makes the Council’s designation vote explicitly "subject to" completion of the new procedural step.
• Updates an internal statutory cross-reference to reflect the new paragraph.
• Narrowing is procedural: it changes how and when FSOC may vote, not the substantive designation criteria.
• Likely to increase coordination and documentation but could lengthen the timeline for designations and related actions.