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July 27, 2023

FSOC Has Been AWOL and Its Authority to Protect the Financial System and American People from Systemic Nonbank Threats Must Be Reinstated

WASHINGTON, D.C.— Dennis M. Kelleher, Co-founder, President, and CEO of Better Markets, issued the following statement on the filing of two Better Markets’ Comment Letters (here and here) to the Financial Stability Oversight Council (FSOC) in response to proposals that would improve the analytic framework used by the FSOC to carry out its critical mission and strengthen the FSOC’s ability to require supervision and regulation of systemically important nonbank financial companies:

“Because of deregulation during the Trump administration, FSOC has been AWOL and, according to FSOC, today there is not a single systemically significant nonbank in the United States. This is objectively ludicrous, given the vast support that has been doled out by the Fed and others to stabilize the nonbanking sector in recent crises. The current proposals are a step in the right direction to reinstate the FSOC’s role as intended by the Dodd-Frank Act and they should be adopted and implemented as quickly as possible.

“FSOC must be fully prepared to undertake its vital work of identifying, assessing, and addressing the full range of financial risks that can threaten our country with catastrophe. The devastation caused by the 2008 crash and the COVID-19 pandemic clearly shows what is at stake: nonbanks that provide bank-like products and present many of the same risks as banks must be subject to appropriate supervision, regulation, and oversight to protect Main Street, consumers, small businesses, and the entire financial system.

“The proposals contain several components that, if implemented as described, should help the FSOC work more efficiently and expeditiously to carry out its mission. First, the separation of the FSOC’s authority to designate systemically significant nonbanks from the analytic framework establishes a more durable process for the FSOC’s work and adds transparency and accountability. Second, eliminating the requirement for cost-benefit analysis brings the FSOC in line with Congressional intent in the Dodd-Frank Act and removes an unnecessary, dangerous and baseless barrier to properly protecting the American people. Third, using the entity-based approach in tandem with the activities-based approach will lead to greater flexibility and effectiveness in the identification of risk that requires action by the FSOC. Understanding risky activities provides an important foundation for the FSOC’s work, but ultimately it is entities themselves, not activities, which force the government’s hand and receive costly taxpayer-funded bailouts.”

Read our full comment letters here and here.


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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