WASHINGTON — The Financial Stability Oversight Council discussed one of its most powerful tools in a closed session on Friday, setting the stage for a potential
Guidance issued by the Trump administration effectively took away FSOC's ability to designate specific nonbank financial firms seen as a danger to the global markets, which would in turn subject them to banklike oversight. While Treasury Secretary Janet Yellen has
But FSOC, the body of regulators established in the wake of the 2008 financial crisis to act as an early warning system for weaknesses in the financial system, heard a presentation from Treasury's staff on "options for assessing and responding to financial stability risks, including the process for designating nonbank financial companies for Federal Reserve supervision and prudential standards."
A Treasury spokesperson declined to comment further.
FSOC only ever designated four firms while it had the ability to do so, but
Aside from Yellen, other financial regulators have hinted that they want to revisit the government's ability to designate nonbanks as systemically important.
""You can't ignore the risks in the nonbank sector; you've got to do what you can to regulate those risks," Fed Vice Chair for Supervision Michael Barr