FSOC solicits comments on new financial stability risk analytic framework, nonbank financial company determination guidance

The Treasury Department’s Financial Stability Oversight Council proposed for public comment a new analytic framework for financial stability risks, which is intended to provide more transparency into how the council assesses potential risks, regardless of whether the risk stems from activities or firms.

Also issued for public comment was a new interpretative guidance on council procedures for designating nonbank financial companies for Federal Reserve supervision and enhanced prudential standards. This would replace existing guidance and outline procedures the council takes in designating a nonbank financial company.

The council said the updates would provide increased visibility into how it performs its duties, as well as enhance its ability to address financial stability risks and help ensure the use of all its statutory authorities to address risks to U.S. financial stability, regardless of the source. The proposed analytic framework also explains how nonbank financial company designations fit into the council’s broader approach to risk monitoring and mitigation.

The nonbank financial company designations guidance would continue to provide “strong processes, including significant two-way engagement with companies under review,” the council said, noting that it also would “minimize administrative burdens on companies under review while providing ample opportunities to be heard and to understand the council’s analyses.” The proposals will be available for 60 days following publication in the Federal Register.