The 2007-09 financial crisis exposed many vulnerabilities in the U.S. financial regulatory framework. Before the crisis, U.S. financial regulation focused narrowly on individual institutions and markets, which allowed supervisory gaps to grow and regulatory inconsistencies to emerge—in turn, allowing arbitrage and weakened standards. No single regulator had responsibility for monitoring and addressing broader risks to financial stability, which often involve different types of financial firms operating across multiple markets, leaving important parts of the system unregulated. The Dodd‐Frank Wall Street Reform and Consumer Protection Act addressed these problems in part through the creation of the Financial Stability Oversight Council.
The Dodd-Frank Act charged the Council with a wide range of duties to help improve collaboration between financial regulatory agencies and address potential risks to the stability of the U.S. financial system. The Council brings together the expertise of federal and state financial regulators to identify and assess emerging threats to U.S. financial stability. By monitoring and understanding these risks, bringing them to the public’s attention, and developing responses, the Council promotes U.S. financial stability.
The Council meets periodically – at least once each quarter – and is committed to conducting its business in an open and transparent manner, opening its meetings to the public whenever possible. At the same time, the central mission of the Council is to monitor systemic and emerging threats, which requires the discussion of supervisory and other market‐sensitive data, including information about individual firms, transactions, and markets that may only be obtained if maintained on a confidential basis. Protection of this information is necessary to prevent destabilizing market speculation that could occur if that information were to be disclosed. Accordingly, the Council has published a transparency policy that enumerates the reasons that the Chairperson may close a meeting, in whole or in part.
The Council is held accountable to Congress and the American people through the publication of an annual report, annual Congressional testimony by the Council Chairperson, open meetings at least twice each year, public meeting minutes disclosing all of the Council’s votes, oversight by the Council of Inspectors General on Financial Oversight and the Government Accountability Office, and regular engagement with stakeholders.