Financial Stability Oversight Council Improvement Act of 2017
(Sec. 2) This bill amends the Financial Stability Act of 2010 to require the Financial Stability Oversight Council, in determining whether a nonbank financial company shall be designated as systemically important and consequently be supervised by the Federal Reserve Board and subject 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.
The bill revises procedural requirements related to council determinations of systemic importance. Specifically, the council must: (1) provide an opportunity, during an annual reevaluation of such a determination for a nonbank financial company, for the company to submit written materials to, and meet with, the council in order to contest the determination; (2) every five years, upon request by a nonbank financial company, reevaluate such a determination and hold a vote on whether to rescind it; and (3) undertake certain procedures for initial evaluations.
(Sec. 4) The bill amends the Federal Reserve Act to lower the maximum allowable amount of surplus funds of the Federal Reserve banks.
[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4061 Introduced in House (IH)]
<DOC>
115th CONGRESS
1st Session
H. R. 4061
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
October 12, 2017
Mr. Ross (for himself, Mr. Delaney, Mr. Luetkemeyer, Ms. Sinema, Mr.
McHenry, Mr. Meeks, Mr. Huizenga, Mr. David Scott of Georgia, Mr.
Duffy, Mr. Foster, Mr. Barr, Mr. Sherman, Mrs. Wagner, Mr. Perlmutter,
Mr. Royce of California, Mr. Himes, Mr. Lucas, Mr. Gottheimer, Mr.
Stivers, Mr. Kihuen, Mr. Pittenger, Mrs. Beatty, Mr. Messer, Ms. Sewell
of Alabama, Mr. Tipton, Mr. Kilmer, Mr. Williams, Mr. Peters, Mr.
Poliquin, Mr. Kind, Mrs. Love, Ms. DelBene, Mr. Hill, Mr. Cardenas, Mr.
Emmer, Mr. Quigley, Mr. Mooney of West Virginia, Mr. Costa, Mr.
MacArthur, Mr. Brendan F. Boyle of Pennsylvania, Mr. Costello of
Pennsylvania, Mr. Thompson of California, Mr. Renacci, Miss Rice of New
York, Mr. Schweikert, Mr. Moulton, Mr. Sessions, Mr. Norcross, Mr.
Tiberi, and Ms. Kuster of New Hampshire) 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 2017''.
SEC. 2. 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
(3) by amending subsection (d) to read as follows:
``(d) Reevaluation and Rescission.--
``(1) Annual reevaluation.--Not less frequently than
annually, the Council shall reevaluate each determination made
under subsections (a) and (b) with respect to a nonbank
financial company supervised by the Board of Governors and
shall--
``(A) 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;
``(B) provide an opportunity for the nonbank
financial company to meet with the Council to present
the information described in subparagraph (A); and
``(C) if the Council does not rescind the
determination, provide notice to the nonbank financial
company, its primary financial regulatory agency and
the primary financial regulatory agency of any of the
company's significant subsidiaries of the reasons for
the Council's decision, which notice shall address with
specificity how the Council assessed the material
factors presented by the company under subparagraphs
(A) and (B).
``(2) Periodic reevaluation.--
``(A) 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.
``(B) Procedures.--Upon receipt of a written
request under paragraph (A), 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); and
``(ii) provide oral testimony and oral
argument before the members of the Council.
``(C) Treatment of plan.--If the company submits a
plan in accordance with subparagraph (B)(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.
``(D) Explanation for certain companies.--With
respect to a reevaluation under this paragraph where
the determination being reevaluated was made before the
date of enactment of this paragraph, the nonbank
financial company may require the Council, as part of
such reevaluation, to explain with specificity the
basis for such determination.
``(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).'';
(4) by amending subsection (e) to read as follows:
``(e) Requirements for Proposed 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, a copy of
which shall be provided to the company's primary
financial regulatory agency;
``(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;
``(C) an opportunity to meet with the Council to
discuss the Council's analysis; and
``(D) a list of the public sources of information
being considered by the Council as part of such
analysis.
``(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) provide a written response to the
Council that includes its assessment of the
risks identified and the degree to which they
are or could be addressed by existing
regulation and, as appropriate, issue proposed
regulations or undertake other regulatory
action to mitigate the identified risks;
``(C) provide the nonbank financial company with
written notice that the Council--
``(i) is considering whether to make a
proposed determination with respect to the
nonbank financial company under subsection (a)
or (b), as applicable, which notice explains
with specificity the basis for the Council's
consideration, including any aspects of the
company's operations or activities that are a
primary focus for the Council; or
``(ii) has determined not to subject the
company to further review, which action shall
not preclude the Council from issuing a notice
to the company under subparagraph (1)(A) at a
future time; and
``(D) in the case of a notice to the nonbank
financial company under subparagraph (C)(i), provide
the company with--
``(i) an opportunity to meet with the
Council to discuss the Council's analysis;
``(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;
``(iii) an explanation of how any request
by the Council for information from the nonbank
financial company relates to potential risks to
the financial stability of the United States
and the Council's analysis of the company;
``(iv) written notice when the Council
deems its evidentiary record regarding such
nonbank financial company to be complete; and
``(v) an opportunity to meet with the
members of the Council.
``(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 first 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 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 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--
``(A) 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 existing regulations or
other regulatory action by the company's primary
financial regulatory agency, if any, is insufficient to
mitigate such risk; and
``(B) provide the primary financial regulatory
agency of the nonbank financial company a copy of the
nonpublic written explanation of the Council's proposed
determination.
``(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 to the members of the Council.
``(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 its subsidiaries
(or, if none, the Board of Governors) to
inspect the company or its subsidiaries for the
purpose of evaluating the implementation of 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).
``(C) Notice to primary financial regulatory
agency.--In the case of a final determination under
subsection (a) or (b), the Council shall provide the
primary financial regulatory agency of the nonbank
financial company a copy of the nonpublic written
explanation of the Council's final determination.'';
(5) in subsection (g), strike ``before the Council makes
any final determination'' and insert ``from the outset of the
Council's consideration of the company, including before the
Council makes any proposed or final determination''; and
(6) by adding at the end the following:
``(j) Public Disclosure Requirement.--The Council shall--
``(1) in each case where a nonbank financial company has
been notified that it is subject to the Council's review and
the company has publicly disclosed such fact, confirm that the
nonbank financial company is subject to the Council's review,
in response to a request from a third party;
``(2) upon making a final determination, publicly provide a
written explanation of the basis for its decision with
sufficient detail to provide the public with an understanding
of the specific bases of the Council's determination, including
any assumptions related thereof, subject to the requirements of
section 112(d)(5);
``(3) include, in the annual report required by section
112, the number of nonbank financial companies from the
previous year subject to preliminary analysis, further review,
and subject to a proposed or final determination; and
``(4) within 90 days after the enactment of this
subsection, publish information regarding its methodology for
calculating any quantitative thresholds or other metrics used
to identify nonbank financial companies for analysis by the
Council.
``(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. 3. RULE OF CONSTRUCTION.
None of the amendments made by this Act may be construed as
limiting the Financial Stability Oversight Council'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.
Committee Consideration and Mark-up Session Held.
Committee Consideration and Mark-up Session Held.
Ordered to be Reported by the Yeas and Nays: 45 - 10.
Reported by the Committee on Financial Services. H. Rept. 115-592.
Reported by the Committee on Financial Services. H. Rept. 115-592.
Placed on the Union Calendar, Calendar No. 450.
Rules Committee Resolution H. Res. 780 Reported to House. The resolution provides for one hour of debate on each measure. The rule provides for H.R. 4061 and H.R. 4293 to be considered under closed rules.
Considered under the provisions of rule H. Res. 780. (consideration: CR H3119-3128)
The resolution provides for one hour of debate on each measure. The rule provides for H.R. 4061 and H.R. 4293 to be considered under closed rules.
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DEBATE - The House proceeded with one hour of debate on H.R. 4061.
The previous question was ordered pursuant to the rule.
Passed/agreed to in House: On passage Passed by the Yeas and Nays: 297 - 121 (Roll no. 135).(text: CR H3119-3121)
Roll Call #135 (House)On passage Passed by the Yeas and Nays: 297 - 121 (Roll no. 135). (text: CR H3119-3121)
Roll Call #135 (House)Motion to reconsider laid on the table Agreed to without objection.
Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.