Legislation introduced on Tuesday by Rep. Randy Neugebauer (R-Texas) would prevent the Financial Stability Oversight Council (FSOC) from making determinations about how various entities impact the country’s financial stability for six months.
Neugebauer, the chairman of the House Financial Services Subcommittee on Housing and Insurance, said he introduced the bill because people are tired of the mindset in Washington that regulators know best.
“By designating more institutions as ‘systemically important,’ Washington regulators are only perpetuating the pattern of ‘too big to fail’ and addiction to bailouts,” Neugebauer said. “To make matters worse, much of these designations are taking place under a veil of secrecy. It’s long past time to shine some light on FSOC and demand some accountability. This bill takes the necessary first steps to move Congress into its appropriate oversight role.”
The FSOC was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The council is tasked with pinpointing risks to the country’s financial stability, promoting market discipline and responding to emerging system risks.
The FSOC has the authority to deem any financial firm a risk to financial stability and to respond with supervision similar to the oversight measures faced by banks. Firms like AIG, GE Capital and Prudential have been labeled financial stability risks by the FSOC and are subject to supervision, Forbes reports.