Why FSOC is Right to Revisit FMU Designation

In the fog in which FSOC chooses to nestle, it was easy to miss an important indication briefly mentioned in the meeting’s readout:  the Council is “reviewing” current financial-market utility (FMU) designations.  Firm-specific and activity-and-practice designations usually get all the airtime.  So it was again on Friday, when FSOC also decided to back off its plan just last November (see Client Report FSOC29) to designate nonbank mortgage banking.  The Council in fact mostly backs off much of what it promises – no wonder Rohit Chopra calls it a “book-report club.”  Precedent thus suggests the FMU threat is idle, but I’ll bet it’s not.

M051324.pdf