Few Trees To Be Found in a Forest of FSOC Reports
By Cheyenne Hopkins and Donna Borak
Although the Financial Stability Oversight Council released studies and proposals on a host of critical topics, including implementation of the Volcker Rule and identification of systemically important nonbanks, the raft of documents gave little sense of what the final regulations on such issues would look like. Regulators, for example, signaled they may rely heavily on banks themselves to identify what activities violate the Volcker ban on proprietary trading, saying banks should develop quantitative metrics for their trading, but also left themselves wiggle room to perform tougher oversight during exams. The council also took the next step in the process for designating nonbank financial companies systemically important, but provided few clues on which firms, exactly, would be targeted. Similarly, the interagency body released a proposal laying out the importance of concentration limits to deter risk within the financial system, but declined to give specifics about what kinds of limitations it might enact. The documents are “really interesting, thorough analysis and good thinking about these topics, but they don’t tell you much about what these rules are going to look like,” said Karen Shaw Petrou, managing partner of Federal Financial Analytics.