Sponsors (4)
The bill adds procedural protections and consultation requirements to reduce unnecessary Fed supervision of nonbanks and lower compliance costs, but those same steps could slow regulators and increase the risk of delayed responses to systemic threats.
Nonbank financial firms (and indirectly taxpayers) face a lower risk of being unnecessarily designated for Federal Reserve supervision, which can reduce compliance costs and help avoid market disruptions.
Financial regulators (FSOC and primary agencies) must consult with the company and consider less intrusive alternatives before voting to subject a nonbank to Fed supervision, creating a formal procedural safeguard and greater engagement with affected firms.
Financial institutions and taxpayers could be put at greater systemic risk because the added consultation and procedural steps may delay FSOC's ability to act swiftly on emerging threats.
Financial institutions and taxpayers may face higher contagion and economic costs if procedural hurdles make it harder to impose stricter supervision quickly and alternatives prove inadequate in practice.
Based on analysis of 2 sections of legislative text.
Requires FSOC to determine, after consulting the company and primary regulator, that alternatives are impracticable or insufficient before voting to designate a U.S. nonbank financial company for Fed supervision.
Official title: Amend the Financial Stability Act of 2010 to require the Financial Stability Oversight Council to consider alternative approaches before determining that a U.S. nonbank financial company shall be supervised by the Board of Governors of the Federal Reserve System, and for other purposes.
Introduced December 18, 2025 by Marion Michael Rounds · Last progress December 18, 2025
Makes a narrow change to FSOC’s process for designating U.S. nonbank financial companies for supervision by the Federal Reserve. Before the Council can vote to designate a company, it must first determine — after consulting the company and its primary regulator — that alternative actions (including regulator actions, heightened standards, or a company plan) are impracticable or insufficient to address the risk, and the Council’s vote is then taken "subject to" that determination; a conforming cross‑reference is also updated.