The Financial Stability Oversight Council (FSOC) is a crucial part of the Dodd-Frank Act, and was created in direct response to weaknesses in our system of financial regulatory oversight revealed by the 2008 financial crisis. Recently questions have been raised concerning FSOC’s powers to designate non-bank financial companies for oversight, and the level of transparency for Council activities. This document reviews the reasons for FSOC’s creation, gives a detailed breakout of the steps in the FSOC designation process, and discusses the issue of FSOC transparency.
AFR and other organizations have submitted letters and materials to members of Congress opposing HR 4413.
AFR has previously called on the SEC to strengthen its rules on credit ratings agencies. This proposal describes a method by which the SEC could change ratings agency incentives to prevent the kinds of large-scale misratings that helped trigger the financial crisis.
“One scam is to fire employees of the private equity firm and rehire them immediately as ‘consultants.’ The investors are responsible for consultants’ salaries, where private equity employees are paid out of their own pockets. Another is taking what most private equity investors believe to be part of management fees, things like legal and compliance costs, and billing their investors for them without the investors properly knowing it. A third is private equity firms lying about the valuation methods they use to tell investors about the returns they make each year. All of these are ways for private equity firms to take money from their investors for themselves.”
Five-and-a-half years after the financial crisis, “the great majority of Americans still see a need for tougher regulation of Wall Street and the lending industry, and welcome the existence of a federal agency with a mandate to police rules of fair play in the consumer finance markets.
“At the House Financial Services Committee, however, a different view has taken hold. The big threat, many on that committee seem to believe, comes not from abusive practices in the financial industry, but from the agency that is beginning to do something about them.”
Consumer and civil rights advocates applaud the CARD Act’s success in saving Americans billions of dollars in predatory and excessive fees. By one estimate, the Act has saved consumers $12.6 billion; a recent report from the Consumer Financial Protection Bureau identifies nearly $4 billion annual savings in fees alone.
