(Bloomberg) — Key Senate Republicans urged the Trump administration to rethink the process for labeling firms whose failure could threaten the financial system, arguing it has led to substantial regulatory costs.
The Financial Stability Oversight Council, a panel of regulators with authority to impose additional oversight on non-bank financial companies, lacks transparency and has created “substantial new regulatory costs” for firms, 10 Republican senators said in a letter to Treasury Secretary Steve Mnuchin on Tuesday.
The lawmakers, including Tom Cotton of Arkansas and Mike Crapo, chairman of the Senate Banking Committee, said Mnuchin should review FSOC’s processes as part of a wider review of financial rules.
“You have our strong support for using all the tools available as Secretary of Treasury to end ‘Too Big To Fail’ and ensure that hard-working Americans are not responsible for any new bailouts,” the senators wrote.
President Donald Trump signed an executive order in February that directed Treasury to examine financial rules. As part of the review, the department plans to look at provisions implemented under the 2010 Dodd-Frank Act, which created FSOC, a Treasury spokesman said Tuesday in an emailed statement.
Treasury believes in appropriate regulation and in ensuring taxpayers aren’t at risk, the spokesman said. At the same time, the U.S. must ensure that banks can lend and provide liquidity which supports economic growth and job creation, he said.
FSOC’s role is to stamp out threats before they cause the level of carnage experienced in the 2008 financial crisis. Its members include the heads of Treasury, the Federal Reserve, the Securities and Exchange Commission and other agencies. Any change in how it identifies systemically important companies could affect insurers and asset managers — not the biggest U.S. lenders, which are automatically designated.