Congressman Robert Hurt (R-Virginia) released the following statement after attending a Financial Services Committee hearing entitled, examining the Dangers of the FSOC’s Designation Process and Its Impact on the U.S. Financial System:
The Financial Stability Oversight Council’s (FSOC) designation process essentially labels large financial institutions as ‘too big to fail,’ putting the American taxpayer at risk for being on the hook for another bailout. This system undermines market discipline, creating a new class of firms that market participants will view as ‘too big to fail’ despite claims that Dodd Frank ended this problem.
Further, the FSOC’s process for designating these ‘systematically important financial institutions’ (SIFIs) is politicized, putting power in the hands of presidentially-appointed agency heads and taking power away from the agencies’ other members of bipartisan commissions as well as members of Congress who attempt to provide accountability and transparency for their constituents. Ignoring the expertise of primary regulators, the FSOC designates SIFIs using highly-speculative scenarios that have no historical or economic backing.
I look forward to continuing to work with my colleagues on the Financial Services Committee to promote policies that instead reform the regulatory approach of the FSOC and end the problem of too big to fail before Americans are saddled with another taxpayer-funded bailout.”
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