Treasury Recommends Changes to FSOC SIFI Designations

Posted November, 20 2017

On Nov. 17, 2017, the U.S. Department of the Treasury released a report and fact sheet outlining proposed changes that would overhaul the way in which the Financial Stability Oversight Council (FSOC) addresses systemic risks, recommending a heavier focus on industry activities instead of individual firms. In the report (prompted by an April request by President Trump to review the council’s operations) Treasury called the FSOC’s authority to have the Federal Reserve oversee "systemically important financial institutions" (SIFIs) a “blunt instrument” for dealing with financial stability risk. The department recommended that rather than this way, the council should switch to an "activities-based or industry-wide approach." The report also recommended other various changes regarding the council’s targeting of companies that may require greater oversight, stating that designated companies should be provided with a clear “off-ramp” and that the FSOC should be more transparent in its annual reevaluation process of companies marked as being systemically important.
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