Will FSOC Be a Priority for Treasury Pick Jack Lew?
By Donna Borak
Recently departed Treasury Secretary Timothy Geithner was clearly dedicated to making the Financial Stability Oversight Council work, despite fears that the group of financial regulators would prove unwieldy and ineffective. The question remains, however, whether his nominated successor, Jack Lew, will be as committed to the council. While Lew will be given some leeway to get up to speed on various issues, there will be pressure to act in order not to undermine the credibility of the council and the remaining work left on its Dodd-Frank to-do list. “Geithner got it in place more or less the way he wanted it and they began to organize and issue decisions,” said Karen Shaw Petrou, a managing partner at Federal Financial Analytics. “But a number of them are keyed up like the nonbank systemic designations. If that just dribbles out, the Dodd-Frank systemic framework will be a lot less credible, even if Congress fails to formally disassemble it. It is a make-or-break in terms of moving forward the systemic regulatory agenda to make it a credible one.” Petrou said Lew may let others handle the FSOC, at least until primary issues, including the debate over the budget and debt ceiling, are addressed. “Even under Secretary Geithner in the last few months, the fiscal issues have been the top priority and understandably so, because the financial health of the country depends on fiscal sanity and getting the latter isn’t easy,” she said. “My expectation is that the deputy secretary, whoever that is that will be appointed, will be someone with a financial policy background and that he or she would take that on as a more full-time responsibility.”