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April 21, 2023

Financial Stability Oversight Council (FSOC) Takes Important Steps to Reverse Dangerous Trump Deregulation and Prevent Financial Crises

WASHINGTON, D.C.— Dennis M. Kelleher, Co-founder, President, and CEO, issued the following statement in connection with the Financial Stability Oversight Council (FSOC) release of a financial stability framework and rule proposal  on nonbank designation:

“We applaud the Financial Stability Oversight Council (FSOC) for, first, announcing a financial stability framework aimed at identifying, assessing, and addressing the full range of financial risks that can threaten the country with catastrophe, and second, proposing a rule to rewrite the guidelines to enable the designation of systemically significant nonbanks.  The 2008 failures of Bear Stearns and Lehman Brothers were telegraphed and anticipated, but the failures of AIG, Goldman Sachs, money market funds, and dozens of other un- and under-regulated nonbanks surprised regulators, policy makers, and elected officials, and required taxpayer backed bailouts.  The FSOC was created, empowered, and mandated to make sure that never happened again.

“Unfortunately, the Trump administration, disregarding history and the law, irresponsibly and dangerously undermined and incapacitated the FSOC, primarily by caving to the financial industry and its lobbyists by adopting guidelines that prevented the FSOC from designating and regulating systemically significant nonbanks.  As a result, there is not one systemically significant nonbank in the entire United States today according to the FSOC, which is objectively ludicrous, as proved yet again in 2020 when the government had to use trillions of dollars to support innumerable nonbanks due to the pandemic-caused economic crash.

“The FSOC, intended to be one of the most important and powerful regulators established by the Dodd-Frank Act, has three key purposes.  First, it was designed to prevent regulatory arbitrage, unfair competition, and the migration of risk from banks to nonbanks by designating systemically significant nonbanks and regulating them like systemically significant banks. Second, it, with the support of the Office of Financial Research (OFR), was supposed to look over the financial horizon and identify emerging risks and their mitigation. Third, the FSOC was supposed to monitor the other financial regulators and ensure they fulfilled their statutory duties or push them to do so as Treasury Secretary Geithner did, as Chair of the FSOC, regarding the SEC and the inadequate regulation of money market funds (which regrettably continues to this day).

“The Trump administration’s actions ensured that the FSOC and OFR did not and, indeed, could not fulfill their mission and statutory duties to prevent financial crashes and taxpayer bailouts.  Today’s actions will enable the FSOC to get back in the business of protecting the American people from the many real and growing systemically significant risks, particularly from nonbanks.  The framework and proposed rule should be finalized as quickly as possible.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit



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