The Dodd‐Frank Wall Street Reform and Consumer Protection Act charged the Council with a number of duties to monitor and promote U.S. financial stability. These responsibilities include to:
- Monitor Threats to Financial Stability: The Council has a statutory duty to monitor the financial services marketplace to identify potential threats and regulatory gaps that could pose risks to U.S. financial stability. It is also tasked with monitoring domestic and international financial regulatory proposals and developments and making recommendations to enhance the integrity, efficiency, competitiveness, and stability of U.S. financial markets.
- Facilitate Regulatory Coordination: The Council is responsible for facilitating information sharing and coordination among the Council member agencies and other federal and state agencies regarding domestic financial services policy development, rulemaking, examinations, reporting requirements, and enforcement actions. The Council also has a duty to recommend to its member agencies general supervisory priorities and principles that result from its discussions and to provide a forum for members to discuss emerging market developments and regulatory issues and to resolve jurisdictional disputes among members.
- Facilitate Information Sharing: The Council has a duty to collect information from member agencies, other federal and state financial regulatory agencies, and the Federal Insurance Office and, if necessary to assess risks to the U.S. financial system, direct the Office of Financial Research (OFR) to collect information from bank holding companies and nonbank financial companies. The Council is also tasked with providing direction to and requesting data and analyses from OFR to support the Council’s work.
- Designate Nonbank Financial Companies, Financial Market Utilities, and Payment, Clearing, or Settlement Activities: The Dodd-Frank Act authorizes the Council to designate certain nonbank financial companies for Federal Reserve supervision and prudential standards, and to designate systemically important financial market utilities and payment, clearing, and settlement activities for additional risk-management requirements.
- Recommend Heightened Standards: The Council has the authority to recommend heightened prudential standards for large, interconnected bank holding companies and nonbank financial companies that are supervised by the Federal Reserve. Moreover, where the Council determines that certain financial activities or practices could create or increase risks of significant liquidity, credit, or other problems spreading among bank holding companies, nonbank financial companies, and U.S. financial markets, the Council may make recommendations to the primary financial regulatory agencies for new or heightened regulatory standards.
FSOC Operations
The Council has established several staff-level committees to promote shared responsibility among the member agencies and to leverage the expertise that exists at each agency. Each committee operates pursuant to a charter that sets forth its responsibilities, duties, and procedures.
The work of the Council is supported by the Office of the Financial Stability Oversight Council (Secretariat) at the Treasury Department. This support includes preparing research and analysis at the request of the Council; monitoring risks to U.S. financial stability; coordinating the work of Council committees; supporting Council functions; coordinating the drafting of public reports to be issued by the Council; and managing the Council’s meetings, documents, and records. The Secretariat coordinates between the staffs of each Council member and member agency – facilitating interagency collaboration, convening and supporting the Council’s staff-level committees, and working with members and member agency staffs to collectively identify emerging financial stability risks and develop policy responses. Secretariat staff include policy experts, researchers, economists, and operational staff.