Financial Stability Oversight Council Improvement Act of 2014 - Amends the Financial Stability Act of 2010 to subject the Financial Stability Oversight Council (Council) to the Administrative Procedure Act.
Requires the Council to make publicly available any final report study or analysis it has prepared, unless exempt from disclosure.
Requires the Council, when determining whether to subject a U.S. or a foreign nonbank financial company to supervision by the Board of Governors of the Federal Reserve System and to prudential standards, to consider the appropriateness of imposing such standards as opposed to other forms of regulation to mitigate identified risks to U.S. financial stability.
Requires the Council, when reevaluating determinations with respect to a nonbank financial company under Federal Reserve Board supervision, to provide written notice to the company and afford it opportunity to submit written materials to contest the determination.
Directs the Council, upon identifying a nonbank financial company for comprehensive analysis of its potential to pose a threat to U.S. financial stability, to provide: (1) written notice that explains with specificity the basis for the identification, and (2) an opportunity to submit written materials for Council consideration.
Prescribes procedural requirements for proposed determinations and final decisionmaking by the Council, including periodic review of individual determinations.
Directs the Council every five years to study: (1) the impact of its determinations to subject nonbank financial companies to Federal Reserve Board supervision and prudential standards, and (2) whether such determinations have the intended result of improving domestic financial stability.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5180 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 5180
To amend the Financial Stability Act of 2010 to improve the
transparency of the Financial Stability Oversight Council, to improve
the SIFI designation process, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 23, 2014
Mr. Ross (for himself, Mr. Delaney, Mr. Bachus, Mr. Murphy of Florida,
Ms. Sinema, and Mr. Luetkemeyer) introduced the following bill; which
was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Financial Stability Act of 2010 to improve the
transparency of the Financial Stability Oversight Council, to improve
the SIFI designation process, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Financial Stability Oversight
Council Improvement Act of 2014''.
SEC. 2. TRANSPARENCY AND ACCOUNTABILITY.
Section 111 of the Financial Stability Act of 2010 (12 U.S.C. 5321)
is amended by adding at the end the following:
``(k) Application of the Administrative Procedure Act.--
``(1) In general.--The Council shall be an agency for
purposes of subchapter II of chapter 5 and chapter 7 of title
5, United States Code (commonly referred to as the
`Administrative Procedure Act').
``(2) Notice of meetings by chairperson.--The Chairperson
shall be responsible for the public announcements required
under section 552b(e) of title 5, United States Code.
``(3) Closed meeting votes.--A determination made by the
Council under section 552b(c) of title 5, United States Code,
may only be made by a majority vote of the voting members of
the Council then serving.
``(4) Treatment as regulators of financial institutions.--
The Council and the Office of Financial Research shall each be
an agency responsible for the regulation or supervision of
financial institutions for purposes of section 552(b)(8) of
title 5, United States Code.
``(l) Publication of Reports and Analyses.--
``(1) In general.--With respect to any final report, study,
or analysis prepared by the Council, the Council shall promptly
make available to the public, after distribution for review or
use--
``(A) any data, analysis, and reports--
``(i) produced by the Council; and
``(ii) produced by member agencies or the
Office of Financial Research to support the
work of the Council; and
``(B) with respect to any findings in such report,
study, or analysis, an explanation for such findings
and any data used to substantiate such findings.
``(2) Redaction of exempt information.--Paragraph (1) shall
not apply to any information that is exempt from disclosure
under section 552(b) of title 5, United States Code.
``(m) Revisions to Analytic Framework for Determinations.--The
Council shall make no revisions to any final published analytic
framework for determinations under this section or adopt or apply any
new similar framework without providing prior public notice and an
opportunity for comment, consistent with section 553 of title 5, United
States Code.''.
SEC. 3. SIFI DESIGNATION PROCESS.
Section 113 of the Financial Stability Act of 2010 (12 U.S.C. 5323)
is amended--
(1) in subsection (a)(2)--
(A) in subparagraph (J), by striking ``and'' at the
end;
(B) by redesignating subparagraph (K) as
subparagraph (L); and
(C) by inserting after subparagraph (J) the
following:
``(K) the appropriateness of the imposition of
prudential standards as opposed to other forms of
regulation to mitigate the identified risks; and'';
(2) in subsection (b)(2)--
(A) in subparagraph (J), by striking ``and'' at the
end;
(B) by redesignating subparagraph (K) as
subparagraph (L);
(C) by inserting after subparagraph (J) the
following:
``(K) the appropriateness of the imposition of
prudential standards as opposed to other forms of
regulation to mitigate the identified risks; and''; and
(D) in subsection (d)--
(i) in paragraph (1), by striking ``and''
at the end;
(ii) by redesignating paragraph (2) as
paragraph (3); and
(iii) by inserting after paragraph (1) the
following:
``(2) provide written notice to the nonbank financial
company being reevaluated and afford such company an
opportunity to submit written materials, within such time as
the Council determines to be appropriate (but which shall be
not less than 30 days after the date of receipt by the company
of such notice), to contest the determination, including
materials concerning whether, in the company's view, material
financial distress at the company, or the nature, scope, size,
scale, concentration, interconnectedness, or mix of the
activities of the company could pose a threat to the financial
stability of the United States; and'';
(3) by amending subsection (e) to read as follows:
``(e) Requirements Prior to a Final Determination, Notice and
Opportunity for Hearing, and Final Determination.--
``(1) Notice of identification for initial evaluation and
opportunity for voluntary submission.--Upon identifying a
nonbank financial company for comprehensive analysis of the
potential for the nonbank company to pose a threat to the
financial stability of the United States, the Council shall
provide the nonbank financial company with--
``(A) written notice that explains with specificity
the basis for so identifying the company; and
``(B) an opportunity to submit written materials
for consideration by the Council as part of the
Council's initial evaluation of the risk profile and
characteristics of the company.
``(2) Requirements before making a proposed
determination.--Before making a proposed determination with
respect to a nonbank financial company under paragraph (3), the
Council shall--
``(A) by a vote of not fewer than \2/3\ of the
voting members then serving, including an affirmative
vote by the Chairperson, approve a resolution that
identifies with specificity any risks to the financial
stability of the United States the Council has
identified relating to the nonbank financial company;
``(B) with respect to nonbank financial company
with a primary financial regulatory agency, provide a
copy of the resolution described under subparagraph (A)
to the primary financial regulatory agency and provide
such agency with at least 180 days from the receipt of
the resolution to--
``(i) consider the risks identified in the
resolution; and
``(ii) issue proposed regulations or
undertake other regulatory action to mitigate
or prevent the identified risks; and
``(C) provide the nonbank financial company with--
``(i) written notice that the Council is
considering whether to make a proposed
determination with respect to the nonbank
financial company under subsection (a) or (b),
as applicable;
``(ii) an opportunity to submit written
materials, within such time as the Council
deems appropriate (but not less than 30 days
after the date of receipt by the company of the
notice described under clause (i)), to the
Council to inform the Council's consideration
of the nonbank financial company for a proposed
determination, including materials concerning
the company's views as to whether it satisfies
the standard for determination set forth in
subsection (a) or (b), as applicable; and
``(iii) written notice when the Council
deems its evidentiary record regarding such
nonbank financial company to be complete.
``(3) Proposed determination.--
``(A) Voting.--The Council may, by a vote of not
fewer than \2/3\ of the voting members then serving,
including an affirmative vote by the Chairperson,
propose to make a determination in accordance with the
provisions of subsection (a) or (b), as applicable,
with respect to a nonbank financial company.
``(B) Deadline for making a proposed
determination.--With respect to a nonbank financial
company provided with a written notice under paragraph
(2)(C)(i), if the Council does not provide the company
with the written notice of a proposed determination
described under paragraph (4) within the 180-day period
following the date on which the Council notifies the
company under paragraph (2)(C) that the evidentiary
record is complete, the Council may not make such a
proposed determination with respect to such company
unless the Council repeats the procedures described
under paragraph (2).
``(C) Review of actions of primary financial
regulatory agency.--With respect to a nonbank financial
company with a primary financial regulatory agency, the
Council may not vote under subparagraph (A) to make a
proposed determination unless--
``(i) the Council determines that any
proposed regulations or other regulatory
actions taken by the primary financial
regulatory agency after receipt of the
resolution described under paragraph (2)(A) are
insufficient to mitigate or prevent the risks
identified in the resolution;
``(ii) the primary financial regulatory
agency has notified the Council that the agency
has no proposed regulations or other regulatory
actions to mitigate or prevent the risks
identified in the resolution; or
``(iii) the period allowed by the Council
under paragraph (2)(B) has elapsed and the
primary financial regulatory agency has taken
no action in response to the resolution.
``(4) Notice of proposed determination.--The Council shall
provide to a nonbank financial company written notice of a
proposed determination of the Council, including an explanation
of the basis of the proposed determination of the Council, that
a nonbank financial company shall be supervised by the Board of
Governors and shall be subject to prudential standards in
accordance with this title, an explanation of the specific
risks to the financial stability of the United States presented
by the nonbank financial company, and a detailed explanation of
why other regulatory action by the company's primary financial
regulatory agency, if any, is insufficient to mitigate or
prevent such risk.
``(5) Hearing.--
``(A) In general.--Not later than 30 days after the
date of receipt of any notice of a proposed
determination under paragraph (4), the nonbank
financial company may request, in writing, an
opportunity for a written or oral hearing before the
Council to contest the proposed determination,
including the opportunity to present a plan to modify
the company's business, structure, or operations in
order to mitigate the risks identified in the notice,
and which plan shall also include any steps the company
expects to take during the implementation period to
mitigate such risks.
``(B) Grant of hearing.--Upon receipt of a timely
request, the Council shall fix a time (not earlier than
30 days after the date of receipt of the request) and
place at which such company may appear, personally or
through counsel, to--
``(i) submit written materials (which may
include a plan to modify the company's
business, structure, or operations); or
``(ii) provide oral testimony and oral
argument.
``(6) Council consideration of company plan.--
``(A) In general.--If a nonbank financial company
submits a plan in accordance with paragraph (5), the
Council shall, prior to making a final determination--
``(i) consider whether the plan, if
implemented, would mitigate the risks
identified in the notice under paragraph (4);
and
``(ii) provide the nonbank financial
company an opportunity to revise the plan after
consultation with the Council.
``(B) Voting.--Approval by the Council of a plan
submitted under paragraph (5) or revised under
subparagraph (A)(ii) shall require a vote of not fewer
than \2/3\ of the voting members then serving,
including an affirmative vote by the Chairperson.
``(C) Implementation of approved plan.--With
respect to a nonbank financial company's plan approved
by the Council under subparagraph (B), the company
shall have one year to implement the plan, except that
the Council, in its sole discretion and upon request
from the nonbank financial company, may grant one or
more extensions of the implementation period.
``(D) Oversight of implementation.--
``(i) Periodic reports.--The Council,
acting through the Office of Financial
Research, may require the submission of
periodic reports from a nonbank financial
company for the purpose of evaluating the
company's progress in implementing a plan
approved by the Council under subparagraph (B).
``(ii) Inspections.--The Council may direct
the primary financial regulatory agency of a
nonbank financial company (or, if none, the
Board of Governors) to inspect the company for
the purpose of evaluating the company's
progress in implementing the company's plan.
``(E) Authority to rescind approval.--
``(i) In general.--During the
implementation period described under
subparagraph (C), including any extensions
granted by the Council, the Council shall
retain the authority to rescind its approval of
the plan if the Council finds, by a vote of not
fewer than \2/3\ of the voting members then
serving, including an affirmative vote by the
Chairperson, that the company's implementation
of the plan is no longer sufficient to mitigate
or prevent the risks identified in the
resolution described under paragraph (2)(A).
``(ii) Final determination vote.--The
Council may proceed to a vote on final
determination under subsection (a) or (b), as
applicable, not earlier than 10 days after
providing the nonbank financial company with
written notice that the Council has rescinded
the approval of the company's plan pursuant to
clause (i).
``(F) Actions after implementation.--
``(i) Evaluation of implementation.--After
the end of the implementation period described
under subparagraph (C), including any
extensions granted by the Council, the Council
shall consider whether the plan, as implemented
by the nonbank financial company, adequately
mitigates or prevents the risks identified in
the resolution described under paragraph
(2)(A).
``(ii) Voting.--If, after performing an
evaluation under clause (i), not fewer than \2/
3\ of the voting members of the Council then
serving, including an affirmative vote by the
Chairperson, determine that the plan, as
implemented, adequately mitigates or prevents
the identified risks, the Council shall not
make a final determination under subsection (a)
or (b), as applicable, with respect to the
nonbank financial company and shall notify the
company of the Council's decision to take no
further action.
``(7) Final council decisions.--
``(A) In general.--Not later than 90 days after the
date of a hearing under paragraph (5), the Council
shall notify the nonbank financial company of--
``(i) a final determination under
subsection (a) or (b), as applicable;
``(ii) the Council's approval of a plan
submitted by the nonbank financial company
under paragraph (5) or revised under paragraph
(6); or
``(iii) the Council's decision to take no
further action with respect to the nonbank
financial company.
``(B) Explanatory statement.--A final determination
of the Council, under subsection (a) or (b), shall
contain a statement of the basis for the decision of
the Council, including the reasons why the Council
rejected any plan by the nonbank financial company
submitted under paragraph (5) or revised under
paragraph (6).''; and
(4) by adding at the end the following:
``(j) Periodic Review of Individual Determination.--
``(1) Review.--Every 5 years after the date of a final
determination with respect to a nonbank financial company under
subsection (a) or (b), as applicable, the nonbank financial
company may submit a written request to the Council for a
reevaluation of such determination. Upon receipt of such a
request, the Council shall conduct a reevaluation of such
determination and hold a vote on whether to rescind such
determination.
``(2) Procedures.--
``(A) In general.--Upon receipt of a written
request under paragraph (1), the Council shall fix a
time (not earlier than 30 days after the date of
receipt of the request) and place at which such company
may appear, personally or through counsel, to--
``(i) submit written materials (which may
include a plan to modify the company's
business, structure, or operations, which shall
specify the length of the implementation
period); or
``(ii) provide oral testimony and oral
argument before the members of the Council.
``(B) Treatment of plan.--If the company submits a
plan in accordance with subparagraph (A)(i), the
Council shall consider whether the plan, if
implemented, would cause the company to no longer meet
the standards for a final determination under
subsection (a) or (b), as applicable. The Council shall
provide the nonbank financial company an opportunity to
revise the plan after consultation with the Council.
``(3) Rescission of determination.--
``(A) In general.--If the Council, by a vote of not
fewer than \2/3\ of the voting members then serving,
including an affirmative vote by the Chairperson,
determines under this subsection that a nonbank
financial company no longer meets the standards for a
final determination under subsection (a) or (b), as
applicable, the Council shall rescind such
determination.
``(B) Approval of company plan.--Approval by the
Council of a plan submitted or revised in accordance
with paragraph (2) shall require a vote of not fewer
than \2/3\ of the voting members then serving,
including an affirmative vote by the Chairperson. If
such plan is approved by the Council, the company shall
implement the plan during the period identified in the
plan, except that the Council, in its sole discretion
and upon request from the company, may grant one or
more extensions of the implementation period. After the
end of the implementation period, including any
extensions granted by the Council, the Council shall
proceed to a vote as described under subparagraph (A).
``(k) Periodic Assessment of the Impact of Designations.--
``(1) Assessment.--Every five years after the date of
enactment of this section, the Council shall--
``(A) conduct a study of the Council's
determinations that nonbank financial companies shall
be supervised by the Board of Governors and shall be
subject to prudential standards; and
``(B) comprehensively assess the impact of such
determinations on the companies for which such
determinations were made and the wider economy,
including whether such determinations are having the
intended result of improving the financial stability of
the United States.
``(2) Report.--Not later than 90 days after completing a
study required under paragraph (1), the Council shall issue a
report to the Congress that--
``(A) describes all findings and conclusions made
by the Council in carrying out such study; and
``(B) identifies whether any of the Council's
determinations should be rescinded or whether related
regulations or regulatory guidance should be modified,
streamlined, expanded, or repealed.''.
SEC. 4. RULE OF CONSTRUCTION.
None of the amendments made by this Act may be construed as
limiting the Financial Stability Oversight Counsel's emergency powers
under section 113(f) of the Financial Stability Act of 2010 (12 U.S.C.
5323(f)).
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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