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In the wake of the decision by the Financial Stability Oversight Committee on Wednesday to remove insurance giant Prudential Financial’s systemically important status, the Investment Company Institute is pressing for Congress to approve bipartisan legislation to reform the federal process for assessing risk to the financial system.

ICI supports two pieces of legislation to reform FSOC. The Financial Stability Oversight Council Improvement Act of 2017, H.R. 4061, which is now before the Senate Banking Committee. The bill passed the House by a 297 to 121 vote in April.

New legislation, S. 3577, was also introduced on Oct. 11 by Senate Banking Committee member Mike Rounds, R-S.D., that includes language on FSOC reform.

Although H.R. 4061 has been lingering at the Senate Banking Committee for months, “there are no plans at this time” to take it up, a spokeswoman for the Senate Banking Committee told ThinkAdvisor on Thursday.

S. 3577 stipulates that the FSOC cannot vote on a designation unless the Council first determines that measures from the primary regulator are “impracticable or insufficient to mitigate the threat” that the company could pose to the U.S.’s financial stability.

H.R. 4061, meanwhile, would require FSOC to undertake certain procedures for initial evaluations of companies and allow for a defined system of redress.

According to a summary of H.R. 4061, the FSOC would have to consider the appropriateness of imposing standards on a nonbank financial company in light of other forms of regulation it was subject to that could mitigate financial system risk.

Paul Schott Stevens, ICI’s president and CEO, stated in a press release issued on the heels of the Prudential decision Wednesday that he championed the bipartisan FSOC reform legislation pending in Congress.

“I hope Congress will act swiftly to approve,”  Stevens said.

Stevens added, however, that “Despite decisions to de-designate individual nonbank entities, regulated funds and their managers continue to live under the threat of inappropriate SIFI designation, which would impose onerous and ill-suited bank-style regulations and penalties on funds and their shareholders, despite a historical record and other evidence showing that regulated funds and their managers do not pose risk to the financial system.”

The group wants deregulatory efforts that would prevent a SIFI designation on fund-related activities and subject these activities to what it sees as ill-fitting, bank-centric rules and regulations.

When a SIFI designation is made, it subjects the institution or activities to enhanced prudential oversight by the Federal Reserve Board under the Dodd-Frank Act of 2010.

The ICI applauded the reforms outlined in a report by the Treasury Department, which chairs the FSOC, a year ago.

Stevens allowed that “FSOC can — and should — play an important role in examining areas of potential risk to our financial system,” but called its previous path “misguided.”