Is Trump’s FSOC still a regulator? Maybe it never was
By John Heltman
The Trump administration has implemented an apparent role reversal for the Financial Stability Oversight Council, leaving the true intended role of the post-crisis systemic risk body unclear. …The council can designate a nonbank financial company as a “systemically important financial institution” — the same designation that automatically applies to banks with more than $50 billion in assets — but even in that instance, a designation only subjects the firm to heightened prudential regulations established and enforced by the Federal Reserve. Karen Shaw Petrou, managing partner at Federal Financial Analytics, said that leaves the FSOC as a relatively toothless agency, so no matter the priorities of the administration presently in power, the council would not be equipped to fulfill the task it was created to perform. “The only thing Congress authorized FSOC to do if they spotted systemic risk is issue a press release or, to the extent it’s relevant, ask a primary regulator to do something about it,” Petrou said. “The law intentionally neutered FSOC with respect to all but its designation and bully pulpit.”