April 3, 2012
Good afternoon. I thank Secretary Geithner for calling today’s meeting of the Financial Stability Oversight Council (FSOC). I also thank my fellow regulators and FSOC members for their coordination and consultation on the rule-writing process to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Lastly, I want to thank the staffs of all the agencies for their efforts in coordinating amongst eight agencies.
I support the final rule and guidance on designations of nonbank financial companies.
Title I of the Dodd-Frank Act authorizes the FSOC to determine whether certain financial companies that are not banks could pose a threat to the financial stability of the United States.
Effective regulation of systemically important nonbank financial entities is essential to preventing risk from such entities from spreading to the U.S. economy. Today’s final rulemaking lays out the criteria and process for the FSOC to make the determination regarding which nonbank financial companies are systemically significant. The rule provides critical protection for the public, as nonbank financial companies that could pose a threat to U.S. financial stability – as AIG did in 2008 – will be subject to Federal Reserve supervision and enhanced prudential standards. This rule helps protect taxpayers from picking up the bill for such a financial entity’s failure.
In response to public and congressional comments, the FSOC reproposed the rule and provided additional proposed guidance. I believe that the final rule and guidance greatly benefitted from this further public input and that the public and market participants will have greater clarity regarding the designation process and standards.
Last Updated: April 3, 2012