Look for House Republicans to demand answers from U.S. Treasury Secretary Timothy Geithner this Thursday on steps the Financial Stability Oversight Council (FSOC) has taken to cut down on overlapping regulations and streamline or eliminate existing regulations for the financial services industry, as promised, when Geithner testifies before the House Financial Services Committee to give the first annual FSOC report.

Treasury Secretary Timothy Geithner

Thirty-four Republicans on the committee sent a letter to Geithner dated Sept. 8 asking for answers by Oct. 1st.  The Secretary had yet to respond by Oct. 3rd, a spokesman from the Committee noted. Treasury did not yet return a phone call to National Underwriter by press-time.

“As concern mounts about the effect that regulatory overkill is having on economic growth and employment, we are writing to request that you provide the Committee with a report on what the [FSOC] is doing to identify and eliminate unnecessary or duplicative regulatory burdens,” the letter stated.

“…we have seen no evidence in the year since Dodd-Frank was enacted of any efforts by the Administration to ‘streamline and simplify’ regulations,”  the letter stated, while pointing to the negative impact on small financial services institutions and on communities that the over-layering of regulations is creating.

Geinther had formerly stated he would take such streamlining steps in an Aug. 2, 2010 speech.

The committee is chaired by Chairman Rep. Spencer Bachus, R-AL., and Rep. Barney Frank, D-Mass.

FSOC is required under the Dodd-Frank to publish an annual report, which it did in July, and to report to Congress on the report. Since this was a mutually agreeable time reached in the months since the report was published, Geithner will be testifying not only before the House Oct. 6th, but before Senate Committee on Banking, Housing, and Urban Affairs earlier in the day.

In its first year, FSOC has basically done a lot of organizational framework activities, ran studies, helped fill out its membership and “laid the groundwork for determining which nonbank financial companies will be supervised by the Federal Reserve and subject to heightened prudential standards, and for designating systemically important financial market utilities that will be subject to risk management standards.”

No insurance companies have been identified yet as SIFIs or systemically important financial institutions. One insurance industry professional, former ACLI lobbyist  Roy Woodall, is a voting member of FSOC. He was confirmed  by the Senate just last week, in late September.

Former Illinois Insurance Department Director and NAIC Secretary-Treasurer  Michael McRaith is director of  the of the Federal Insurance Office (FIO) at Treasury, is a non-voting member. The FIO director is a non-voting member on the 13-member FSOC.

Secretary Geinther wrote in July, in the FOSC annual report, that the task is inherently difficult and described a plan that requires regulatory dexterity nimbleness in the face of change and uncertainty: 

“By creating the Council, Congress recognized that financial stability will require the collective engagement of the entire financial regulatory community. This is an inherently difficult exercise. No financial crisis emerges in exactly the same way as its predecessors, and the most significant future threats will often be the ones that are hardest to diagnose and preempt.”

However, Geithner noted that “the best way to prepare for this uncertainty is to continue to build the shock absorbers and safeguards that improve the resilience of the financial system. We need to recognize that policy and regulation will often be behind the curve of innovation, and we must meet assumptions of ongoing stability with a heavy dose of skepticism.”