Senators Ask Treasury Secretary Mnuchin To End “Too Big To Fail”
This week, members of the Senate Banking Committee sent a letter to Treasury Secretary Mnuchin asking for an end to “Too Big To Fail.”
Following the 2007-2008 financial crisis, The Dodd–Frank Wall Street Reform and Consumer Protection Act created Financial Stability Oversight Council (FSOC) and gave it the authority to designate non-bank institution as systemically important financial institutions (SIFI). Such institutions are then subject to heightened regulatory requirements and given an implicit guarantee of future taxpayer bailouts, codifying “Too Big To Fail” into law.
The letter highlights not only the arbitrary selection process that FSOC uses to determine SIFIs, but also the rising regulatory costs associated with these designations and likelihood of future taxpayer bailouts. Following President Trump’s executive order on financial regulations, highlighting the same principles these Senators have called Secretary Munchin to act on, Congress should also take up The Financial CHOICE Act. Among ending “Too Big To Fail,” the CHOICE Act makes true progress towards regulatory relief.
You can read the letter below or click here.
Dear Secretary Mnuchin,
We write in strong support of President Trump’s Executive Order setting core principles for regulating the United States financial system. As part of your review and report on the existing laws, regulations, guidance and government policies “that inhibit Federal regulation of the United States financial system in a manner consistent with the Core Principles,” we hope that you will review the policies and procedures underlying the Financial Stability Oversight Council’s (FSOC) determination that a nonbank financial company shall be subject to supervision by the Board of Governors of the Federal Reserve System and subject to enhanced prudential standards.
The FSOC’s process for designating non-bank systemically important financial institutions lacks transparency and accountability, insufficiently tracks data, and does not have a consistent methodology for determinations. Consequently, the designation process has created substantial new regulatory costs while putting taxpayers on the hook for any future bailout to these firms. It frustrates the ability of American companies to be competitive with foreign, while thwarting economic growth.
Please know you have our strong support for using all the tools available as Secretary of Treasury to end ‘Too Big To Fail’ and ensure that hard-working Americans are not responsible for any new bailouts.
Senator Tom Cotton, R-Arkansas
Senator Pat Toomey, R-Pennsylvania
Senator Richard Shelby, R-Alabama
Senator Mike Crapo, R-Idaho
Senator Mike Rounds, R-South Dakota
Senator John Kennedy, R-Louisiana
Senator Ben Sasse, R-Nebraska
Senator David Perdue, R-Georgia
Senator Thom Tillis, R-North Carolina
Senator Tim Scott, R-South Carolina