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The Senate Banking Committee Chairman Richard Shelby, R-Ala., convened a hearing where he and others criticized the Financial Stability Board for its lack of accountability and influence on U.S. regulators.
July 9 -
The Financial Stability Oversight Council has a mandate to designate nonbank financial companies as systemically important based on criteria established by Congress. Its designation decisions should not be predetermined by the actions of global regulators.
August 19
WASHINGTON — Senate Banking Committee Chairman Richard Shelby sent a letter to regulators this week raising concerns about the role of the Financial Stability Board in designating large banks as systemically risky and whether the international council has undue influence on U.S. policy.
"During recent hearings… numerous witnesses have expressed concerns regarding the Financial Stability Board," Shelby wrote in a letter dated Sept. 29. "While the concerns pertain generally to the lack of transparency and accountability surrounding the FSB’s deliberations and decisions, I would like to bring three specific concerns to your attention."
The Alabama Republican asked whether U.S. firms designated by the FSB received "due process," cited concerns about whether some FSB actions "may unfairly benefit European entities," and said the role of U.S. agencies in international regulatory discussions is "unclear."
"This lack of transparency is concerning because the FSB’s decisions appear to influence the deliberations of the Financial Stability Oversight Council (FSOC) and its subsequent designations," Shelby wrote in the letter to Treasury Secretary Jack Lew and Federal Reserve Board Chair Janet Yellen.
The Alabama Republican asked five specific questions, answers to which he said would provide "greater transparency of the international process." He gave the regulators until Oct. 15 to respond.
Those questions were:
- Do systemic designations of U.S. companies reflect decisions "made first domestically through the appropriate U.S. regulatory and statutory processes?"
- Do international discussions in which U.S. regulators participate have the same level of transparency and public input required under U.S. law?
- Do regulators solicit input from affected U.S. firms and the public on issues discussed and decided upon at the FSB?
- How do U.S. regulators ensure that any international designation process has clear and consistent guidelines?
- Are designations made by the FSB subject to "rigorous and regular reexaminations?"
