What🏅 Is the Financial Stability Oversight Council (FSOC)?

The Financial Stability Oversight Council (FSOC) was established in 2010 with the passage of the Dodd-Frank Wall Stre♒et Reform a🤪nd Consumer Protection Act. The FSOC is responsible for monitoring any risks to the US financial sector associated with large banks or financial holding companies that helped to🎀 derail the economy during the Great Recession.

The FSOC grew out of the public outrage surrounding the financial service bailouts during the 2007 financial crisis and the belief that the banking and finance sectors need to be held accountable for their actions—that no entity should be “澳洲幸运5开奖号码历史查询:too big to fail.” President Barack Obama ꦅsigned the Dodd-Frank Act into law in July of 2010, and the FSOC issued its first report a year later.

Understandin🥀g the Financial Stability Oversight Council (FSOC)

According to the Dodd-Frank Act, the FS൲OC has three primary purposes:

1. "To identify risks to the financial stability of the United States that could arise from the material financial distress or failure, or ongoing activities, of large, interconnected bank holding companies or nonbank financial companies, or that could arise outside the financial services marketplace.
2. To promote market discipline by eliminating expectations on the part of shareholders, creditors, and counterparties of such companies that the U.S. government will shield them from losses in the event of failure.
3. To respond to emerging threats to the stability of the U.S. financial system."

The Council is composed of 10 voting and five non-voting members. The 澳洲幸运5开奖号码历史查询:US Treasury Secretary occupies the FSOC's chair position.

Other voting members include the chair of the Securities and Exchange Commission, the chair of the 澳洲幸运5开奖号码历史查询:Federal ౠDeposit Insurance Corporation, the Director of the Federal Housing Finance Agency, the Director of the 澳洲幸运5开奖号码历史查询:Consumer Financial ꦉProtection Bureau, and othe💛r insurance and financial regulation experts⛎ within the US government.

Non-voting members, who operate in an advisory role, consist of a state insurance commissioner designated by the state insurance commis💫sioners, a state banking securities commissioner, and others.

Additional tasks of the FSOC include increasing the discipline of financial markets in communicating the message that no institution is “too big to fail” and ♉that the government will not prevent losses to the financial sector and shield such organizations from losses. 

Example of a Financial Stabilit🍰y🌱 Oversight Council (FSOC) Report

The Dodd-Frank Act also requires that the FSOC file a public annual report detailing the Council's findings. The FSOC must report to Congress: "any potential threats to the stability of the US economy, any significant financial market and regulatory developments, as well as recommendations to enhance the integrity, efficiency, competitiveness, and stability of US financial markets."

As you might imagine, the Council's 2020 annual report, filed on Dec. 3, 2020, analyzes various risks to corporate and household finances caused by the global crisis.

Beyond the economic stress many individual Americans faced due to the pandemic, the FSOC identifies some key areas of interest pertinent to economic stability including the historically high ratio of 澳洲幸运5开奖号码历史查询:corporate credit to GDP, the commercial real estate market, the extreme volatility of financial markets, and potentially significant structural vulnerabilities remain in the short-term 澳洲幸运5开奖号码历史查询:wholesale funding market.