The Financial Stability Oversight Council has voted to changehow it designates non-bank financial institutions as systemicallyimportant, or “too big to fail.”
The vote by the council this week came after sustainedcomplaints that FSOC’s review process of the country’s largestfinancial institutions lacked transparency. It also coincided withrenewed effortsin Congress to rein in the council’s authority.
The FSOC was created by the Dodd-Frank Act to overseeinstitutions large enough to shock the overall economy were they tofail. Treasury Secretary Jack Lew chairs the council. The chairs ofthe Federal Reserve, Securities and Exchange Commission and theFederal Deposit Insurance Corp. are among its 10 votingmembers.
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