WASHINGTON — House Republicans
Rep. French Hill, R-Ark., chairman of the House Financial Services Committee's digital assets panel, said that FSOC's ability to designate nonbanks gives the body the ability to "sidestep Congress," specifically on
FSOC recently
"The new guidance is intended to enhance protections for our financial system," Hill said at a hearing on the issue. "But in practice, this revision paves the path for potential abuse and unintended consequences and raises serious questions about whether FSOC is taking the best approach to actually address systemic risk."
Hill referenced the work that the House Agriculture and House Financial Services Committees have done on a digital assets bill. That bill has gained some Democratic support, but still stands a relatively limited chance of passing into law in a divided Congress, and tensions among House Republicans after right-wing hardliners sabotaged their own party's spending deal this week.
Still, with the finance committee's chairman Rep. Patrick McHenry, R-N.C., set to retire at the end of his current term, and his long history of working with Democratic ranking member Rep. Maxine Waters, D-Calif., the legislation could still see a final push later this year.
Hill, who has also played a leading role in that legislation, raised concerns about what he perceives as FSOC's power over the process at the hearing on Wednesday.
"FSOC is effectively telling Congress, in my view, that if you don't do things our way, we are going to consider nonbank financial companies such as digital assets companies systemically important," Hill said. "This would not be the carefully tailored approach that is being developed by the financial services committee and by the agriculture committee, and importantly it would mean only companies that FSOC has designated systemically important would be subject to these heightened standards."
Rep. Tom Emmer, R-Minn., majority whip in the House, had some of the harshest comments about FSOC, calling it a "a political weapon for the administrative state, circumventing congressional oversight and stifling American innovation."
"While many Financial Stability Oversight Council members are individually accountable to Congress and the public, the Dodd Frank Act created a troubling loophole by empowering these same officials to sit on the Financial Stability Oversight Council," he said. "It established a body effectively immune to congressional oversight, raising concerns about a potential disconnect between its actions and the will of the American people. These unchecked bureaucrats abused their positions on the Financial Stability Oversight Council to bypass elected representatives and crush politically unpopular industries and companies."
Democratic lawmakers took a less critical approach to FSOC, but many still said that the designation authority should be used with caution. Rep. Bill Foster, D-Ill, who's worked on bipartisan legislation that would encourage FSOC to use other authorities, said that both designation and other tools, such as directing interagency coordination and submitting recommendations to Congress, should be considered.
"A famous saying in this room is that if you have a bazooka and everyone knows you have a bazooka, you might not have to use it," Foster said. "So I think that giving the upside the ability to designate as a last resort is an essential power that you have to fix problems."
