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house Bill H.R. 4061

Should the Process of Designating Financial Firms as “Systemically Important” be More Transparent?

Argument in favor

This bipartisan, common sense bill would address the shortcomings of the process used by the Financial Stability Oversight Council to designate non-bank financial institutions as “systemically important” and give firms a chance to respond.

2011gsn's Opinion
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03/21/2018
How about a law to systemically break up to big to fail organizations so the tax payer doesn’t ever have to bail them out again.
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Bryan's Opinion
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03/21/2018
This is actually a better way of resolving whether mutual funds should be stress tested, because the answer is it depends. If different fiduciary accounts could be made more transparent as to their systematic relationship to the banking sector as a whole, it would ideally act as a glancing stress test. This undoubtedly exists internally within banks, but people should have a clearer cut understanding not having to be deciphered by regulators and auditors.
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Leo's Opinion
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03/18/2018
This allows citizens to make more informed financial decisions.
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Argument opposed

This bill would bog down the Financial Stability Oversight Council and its process of designating large, non-bank financial institutions as “systemically important” — putting the financial sector at risk of another crash.

OlderNWiser's Opinion
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03/21/2018
Earlier GOP bills this year have been misleading, named the opposite of what they are so often that to trust any now is a foolhardy risk. We need Dodd-Frank Protections more than ever with the most corrupt White House in history supported by a GOP that rakes in money, mouths niceties, and watches the suffering and decline of the country with comfort so long as they have theirs. Reverse Robin Hood is getting older by the minute. Help!
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Rebecca's Opinion
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03/21/2018
I don’t trust any Republican bills that deal with banking when they just voted to tear apart Dodd Frank
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jweland's Opinion
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03/21/2018
Earlier GOP bills this year have been misleading, named the opposite of what they are so often that to trust any now is a foolhardy risk. We need Dodd-Frank Protections more than ever with the most corrupt White House in history supported by a GOP that rakes in money, mouths niceties, and watches the suffering and decline of the country with comfort so long as they have theirs. R
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
      senate Committees
      Committee on Banking, Housing, and Urban Affairs
  • The house Passed April 11th, 2018
    Roll Call Vote 297 Yea / 121 Nay
      house Committees
      Committee on Financial Services
    IntroducedOctober 12th, 2017

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What is House Bill H.R. 4061?

This bill would change the procedures federal regulators use when determining which non-bank financial institutions should be designated as systemically important financial institutions (SIFIs) by the Financial Stability Oversight Council (FSOC) (such a determination leads to enhanced regulation by the Federal Reserve). The FSOC would be required to reevaluate, both periodically and annually, its SIFI determinations of non-bank financial firms that are supervised by the Federal Reserve. It would also have to provide firms with an opportunity to provide the FSOC with written materials during the initial evaluation, an opportunity to meet with FSOC to discuss the analysis, and disclose the information used in its analysis.

Every five years the FSOC would required to study the impact of its SIFI determinations on nonbank financial institutions and whether those determinations have the intended result of improving domestic financial stability.

Impact

Nonbank financial institutions designated as systemically important; the FSOC; and the Federal Reserve.

Cost of House Bill H.R. 4061

$34.00 Million
The CBO estimates that enacting this bill would increase deficits by $34 million over the 2018-2027 period.

More Information

In-Depth: Sponsoring Rep. Dennis Ross (R-FL) introduced this bill to make the process of designating non-bank financial institutions as systemically important more transparent:

“After 8 years, if we don’t take steps to address the obvious shortcomings of the FSOC, like the nonbank designation process, the regulator intended to protect financial stability could very well become a liability. The American Action Forum has found that additional capital requirements resulting from a SIFI designation could cost American retirees at least $100,000 in potential savings over the lifetime of their investments. That’s why the reforms included in H.R. 4061 are critical to the more than 90 million investors who rely on the services of asset management firms to achieve their most important financial goals. Companies must have the chance to de-risk before the FSOC can saddle their customers with such extraordinary losses… This bill demonstrates that there can be broad, bipartisan support for increased transparency of the FSOC designation process.”

Some Democrats opposed this bill in committee and explained their dissent in its committee report:

“H.R. 4061 is an attempt to prevent the Financial Stability Oversight Council (FSOC) from doing its statutorily-required job of preventing another financial crisis by bogging it and its designation process down in endless analysis and litigation. Congress created the FSOC when it passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) for the purpose of identifying and responding to risks to financial stability, as well as eliminating expectations the government will shield market participants from losses. Congress specifically granted the FSOC authority to determine that a U.S. nonbank financial company should be supervised by the Federal Reserve and subject to enhanced prudential standards if financial distress at, or the activities of the company, would pose a threat to U.S. financial stability.”

This legislation passed the House Financial Services Committee on a 45-10 vote and has the support of 57 bipartisan cosponsors, including 29 Democrats and 28 Republicans.


Media:

Summary by Eric Revell

(Photo Credit: scyther5 / iStock)

AKA

Financial Stability Oversight Council Improvement Act of 2017

Official Title

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.

    How about a law to systemically break up to big to fail organizations so the tax payer doesn’t ever have to bail them out again.
    Like (85)
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    Earlier GOP bills this year have been misleading, named the opposite of what they are so often that to trust any now is a foolhardy risk. We need Dodd-Frank Protections more than ever with the most corrupt White House in history supported by a GOP that rakes in money, mouths niceties, and watches the suffering and decline of the country with comfort so long as they have theirs. Reverse Robin Hood is getting older by the minute. Help!
    Like (94)
    Follow
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    I don’t trust any Republican bills that deal with banking when they just voted to tear apart Dodd Frank
    Like (61)
    Follow
    Share
    Earlier GOP bills this year have been misleading, named the opposite of what they are so often that to trust any now is a foolhardy risk. We need Dodd-Frank Protections more than ever with the most corrupt White House in history supported by a GOP that rakes in money, mouths niceties, and watches the suffering and decline of the country with comfort so long as they have theirs. R
    Like (19)
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    This is actually a better way of resolving whether mutual funds should be stress tested, because the answer is it depends. If different fiduciary accounts could be made more transparent as to their systematic relationship to the banking sector as a whole, it would ideally act as a glancing stress test. This undoubtedly exists internally within banks, but people should have a clearer cut understanding not having to be deciphered by regulators and auditors.
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    We've seen, time and again, that financial institution leadership chooses greed and profit ahead of customers and the good of the public, even to crashing our economy and savings while lining their pockets. That's the behavior which led to these rules. I see no reason to 'let them off the leash" again, expecting their behavior will change. This bill comes from financial lobbyists, and will only help their clients, not the bulk of the public. Your investments will be safer if you vote Nay.
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    Any financial bill that has done away with any part of Dodd-Frank is just another nail in the coffin of the US economy. For the UMPTEENTH TIME the Republicans need to remember what happened when the W Bush administration loosened all the rules for the banks and they took advantage and the country went into the worst recession since the 1930s. We were just coming out of that - with no help from the Republicans- and NOW the Republicans are doing the same thing they did before 2008. Maybe they don’t want to learn. Maybe their own pockets are more important than the financial stability of the country. Maybe they are trying to set us up for a fall just before elections to try to win again. My question is: What happened to the family values, fiscal Conservative party that the Republicans used to be. VOTE THEM OUT!!!
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    Quit deregulating the regulators! Their job is to REGULATE. Also, I hate it that every reason in favor of these deregulation bills is always "bipartisan". As if "bipartisan" means "good for Americans". The Iraq War was bipartisan. NAFTA was bipartisan. The War On Drugs was bipartisan. All of those actions ended up being horrible for Americans. Quit trying to help cause the Second Great Recession.
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    Financial firms are ruinous to our democracy. They should be removed and their holdings distributed to the poor.
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    As a retiree this bill is not in my best interests. In addition we need Dodd-Frank to be kept intact and add new regulations to protect consumers. I’m upset that this GOP led Administration is allowing DJT to defang Dodd-Frank and dismantle the Consumer Protection Cabinet Level Agency to shut down. Not good. Not good at all unless you are a a big bank or investment firm. Vote no!
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    BE WARE ! READ THE SUMMARY ! A REPUBLICAN FROM THE NRA BOUGHT AND PAID FOR STATE OF FLORIDA NO LESS BROUGHT THIS BILL UP ! THE REPUBLICANS WANT TO BOG DOWN IN PERPETUAL LITIGATION THE OVERSIGHT OF THE PROPER REGULATORS THAT THEY ARE TRYING TO DESTROY! VOTE ALL REPUBLICANS OUT !!
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    I don't trust anything financial that comes from a "for-profit" Republican Congress.
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    This allows citizens to make more informed financial decisions.
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    THIS BILL WAS INTRODUCED BY A REPUBLICAN AND SO I DO NOT TRUST IT--IT SOUNDS TOO GOOD, SO WHAT IT ACTUALLY AND MANY DEMOCRATS AGREED IS REALLY AN ATTEMPT TO DO AWAY WITH REGULATIONS, WHICH IS SOMETHING THEY REPUBLICANS LOVE TO DO AND WHY WE HAD THE Great Recession! THEY ALWAYS MAKE IT SEEM GOOD, BUT WHENYOU LOOK AT THE ACUTAL LANGUAGE OF THE BILL, IT IS THE OPPOSITE OF WHAT IT SOUNDS LIKE.
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    Read the bill. The title makes it sound positive but the text of the bill is where you can see the purpose is to make it easier for shady financial companies to evade investigation.
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    You Orwellian schmucks. Do you really have so little respect for your constituents that you believe we can’t see through this BS?
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    More transparency is good. Except when it is a thinly veiled attempt to undermine regulations.
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    Do regulators need to hold the hand of these financial institutions throughout the entire process? This is a transparent attempt to slow down the regulatory process. If the FSOC has to go through all these steps, some institutions are going to be able to avoid these regulations for years and by that time it might be too late to stop the next crash.
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    Just enforce Dodd-Frank and quit trying to circumvent the laws.
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    This proposed bill is an attempt to prevent the Financial Stability Oversight Council (FSOC) from doing its statutorily-required job of preventing another financial crisis by bogging it and its designation process down in endless analysis and litigation.
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