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The Financial Stability Oversight Council, formed as part of new legislation under Dodd-Frank Wall Street Reform and Consumer Protection Act, convened for its first meeting Friday. The Council, comprised of a who’s who of the country’s top regulators including Timothy Geithner, Ben Bernanke and FDIC Chair Sheila Blair, is charged with identifying threats to the country’s financial stability, promoting market discipline and responding to emerging market risks.
In its meeting, members approved the Council's bylaws, transparency policy, an Advance Notice of Proposed Rulemaking on designating nonbank financial companies for heightened supervision, a Notice and Request for Information regarding the Council's "Volcker Rule" study and an Integrated Implementation Roadmap for both the Council and its independent member agencies.
The council has four months to study the Volcker Rule and make recommendations on how it should be implemented. Regulations are then due nine months after the study is completed. They will go into effect one year later.
Critics contend too many policy decisions will be left to unelected regulators, causing confusion and lapses in oversight and unnecessarily burdening financial markets.
In preparation for the meeting, on Thursday the Senate Banking Committee grilled regulators on implementation of the Dodd-Frank Bill, while members offered up advice of their own.
“I’ve heard critics say that the new law leaves too much up to regulators,” Sen. Chris Dodd, D-Conn., said Thursday. “But it was never my intention to have the Senate do the job of regulators; indeed, I don’t think anyone wants the Senate writing detailed prescriptions that require technical expert knowledge. Nor could we afford to tie regulators’ hands with rigid legislative requirements that can’t be adapted to changing circumstances.
“What we have done with this legislation is to eliminate the gaps, overlaps and shortfalls that allowed some financial actors to game the regulatory structure—and some parts of our financial system to go unregulated entirely.”
In attendance at the Council meeting Friday were:
- Tim Geithner, Treasury Secretary (Chairperson of the Council);
- Sheila Bair, Chairman of the Federal Deposit Insurance Corporation;
- Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System;
- Edward DeMarco, Acting Director of the Federal Housing Finance Agency;
- Gary Gensler, Chairman of the Commodity Futures Trading Commission;
- Debbie Matz, Chairman of the National Credit Union Administration ;
- Mary Schapiro, Chairman of the U.S. Securities and Exchange Commission;
- John Walsh, Acting Comptroller of the Currency;
- William Haraf, Commissioner, California Department of Financial Institutions (non-voting member); and
- John Huff, Director, Missouri Department of Insurance, Financial Institutions, and Professional Registration (non-voting member);
- David Massey, Deputy Securities Administrator, North Carolina Department of the Secretary of State, Securities Division (non-voting member).