H. Rept. 114-473 - FINANCIAL STABILITY OVERSIGHT COUNCIL REFORM ACT114th Congress (2015-2016)
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114th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 114-473
======================================================================
FINANCIAL STABILITY OVERSIGHT COUNCIL REFORM ACT
_______
March 23, 2015.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hensarling, from the Committee on Financial Services, submitted the
following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 3340]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 3340) to place the Financial Stability Oversight
Council and the Office of Financial Research under the regular
appropriations process, to provide for certain quarterly
reporting and public notice and comment requirements for the
Office of Financial Research, and for other purposes, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Financial Stability Oversight Council
Reform Act''.
SEC. 2. FUNDING.
(a) In General.--Section 155 of the Financial Stability Act of 2010
(12 U.S.C. 5345) is amended--
(1) in subsection (b)--
(A) in paragraph (1), by striking ``be immediately
available to the Office'' and inserting ``be available
to the Office, as provided for in appropriation Acts'';
(B) by striking paragraph (2); and
(C) by redesignating paragraph (3) as paragraph (2);
and
(2) in subsection (d), by amending the heading to read as
follows: ``Assessment Schedule.--''.
(b) Effective Date.--The amendments made by this section shall take
effect on October 1, 2016.
SEC. 3. QUARTERLY REPORTING.
Section 153 of the Financial Stability Act of 2010 (12 U.S.C. 5343)
is amended by adding at the end the following:
``(g) Quarterly Reporting.--
``(1) In general.--Not later than 60 days after the end of
each quarter, the Office shall submit reports on the Office's
activities to the Committees on Appropriations of the House of
Representatives and the Senate, the Committee on Financial
Services of the House of Representatives, and the Committee on
Banking, Housing, and Urban Affairs of the Senate.
``(2) Contents.--The reports required under paragraph (1)
shall include--
``(A) the obligations made during the previous
quarter by object class, office, and activity;
``(B) the estimated obligations for the remainder of
the fiscal year by object class, office, and activity;
``(C) the number of full-time equivalents within the
Office during the previous quarter;
``(D) the estimated number of full-time equivalents
within each office for the remainder of the fiscal
year; and
``(E) actions taken to achieve the goals, objectives,
and performance measures of the Office.
``(3) Testimony.--At the request of any committee specified
under paragraph (1), the Office shall make officials available
to testify on the contents of the reports required under
paragraph (1).''.
SEC. 4. PUBLIC NOTICE AND COMMENT PERIOD.
Section 153(c) of the Financial Stability Act of 2010 (12 U.S.C.
5343(c)) is amended by adding at the end the following:
``(3) Public notice and comment period.--The Office shall
provide for a public notice and comment period of not less than
90 days before issuing any proposed report, rule, or
regulation.
``(4) Additional report requirements.--
``(A) In general.--Except as provided under paragraph
(3), the requirements under section 553 of title 5,
United States Code, shall apply to a proposed report of
the Office to the same extent as such requirements
apply to a proposed rule of the Office.
``(B) Exception for certain reports.--This paragraph
and paragraph (3) shall not apply to a report required
under subsection (g)(1) or section 154(d)(1).''.
Purpose and Summary
On July 29, 2015, Representative Tom Emmer introduced H.R.
3340, the ``Financial Stability Council Reform Act,'' which
amends the Financial Stability Act of 2010 to provide funding
for the Financial Stability Oversight Council (FSOC) and the
Office of Financial Research (OFR) through appropriations acts.
H.R. 3340 also requires the OFR to submit quarterly reports to
Congress regarding its activities and to provide a public
notice and comment period of at least 90 days before issuing
any report, rule, or regulation.
Background and Need for Legislation
The Dodd-Frank Wall Street Reform and Consumer Protection
Act created the FSOC and charged it with identifying risks to
the financial stability of the United States, promoting market
discipline by eliminating the expectation of government
bailouts, and responding to emerging threats to the U.S.
financial system. The Dodd-Frank Act also created the OFR as an
office within the Treasury Department charged with collecting
and analyzing financial transaction and position data in
support of the FSOC. The Dodd-Frank Act grants the OFR broad
powers to compel the production of vast amounts of information
and data from financial market participants. The OFR has the
authority to demand ``all data necessary'' from financial
companies, including banks, hedge funds, private equity firms,
and brokerages. The OFR can compel financial companies to
produce sensitive, non-public information such as the
identities of counterparties to credit default swaps, as well
as information about individual loans, such as interest rate
and maturity. To compel the production of information, the
director of the OFR may issue subpoenas.
The OFR sets its own budget and funds itself outside of the
Congressional appropriations process. Moreover, under Section
118 of the Dodd-Frank Act, any expenses of the FSOC are treated
as expenses of, and paid by, the OFR, placing FSOC outside the
appropriations process as well. Section 155 of the Dodd-Frank
Act authorizes the OFR to fund itself and the FSOC through an
assessment schedule applicable to bank holding companies with
over $50 billion in total consolidated assets, and nonbank
financial companies designated by the FSOC for enhanced
supervision by the Federal Reserve Board of Governors.
Because the OFR funds itself through the assessments it
levies on financial institutions, Congress's oversight over it
is significantly limited; the Dodd-Frank Act only requires that
the Director report to and testify annually before Congress.
Additionally, the OFR determines the size of its staff with no
direction from Congress, and the salaries that the OFR pays its
employees are not subject to the limitations that govern the
salaries of other government employees. At the end of FY 2015,
OFR had 201 employees, more than six times the number of people
it employed in FY 2011. In FY 2015, the OFR spent about $85
million; its estimated budget for FY 2016 is $99 million, a 16%
increase.
Hearings
The Committee on Financial Services' Subcommittee on
Financial Institutions and Consumer Credit held a hearing
examining matters relating to H.R. 3340 on October 21, 2015.
Committee Consideration
The Committee on Financial Services met in open session on
November 3, 2015, and adopted an amendment to H.R. 3340 offered
by Representative Emmer by voice vote. The Committee ordered
H.R. 3340 to be reported favorably to the House as amended by a
recorded vote of 33 yeas to 24 nays (recorded vote no. FC-69),
a quorum being present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
sole record vote in committee was a motion by Chairman
Hensarling to report the bill favorably to the House as
amended. The motion was agreed to by a recorded vote of 33 yeas
to 24 nays (record vote no. FC-69), a quorum being present.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the committee based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 3340
will provide for greater transparency and accountability in the
operations of the FSOC and OFR by subjecting both agencies to
the congressional appropriations process, and by requiring the
OFR to submit quarterly reports to Congress and to provide
public notice and comment before the issuance of any rule,
regulation, or report.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimates
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, December 1, 2015.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3340, the
Financial Stability Oversight Council Reform Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Keith Hall.
Enclosure.
H.R. 3340--Financial Stability Oversight Council Reform Act
Summary: Under current law, the Financial Research Fund
(FRF) is permanently authorized to pay, without further
appropriation, the operating costs of the Financial Stability
Oversight Council (FSOC), the Office of Financial Research
(OFR), as well as certain expenses of the Federal Deposit
Insurance Corporation from assessments on certain bank holding
companies and nonbank financial companies. H.R. 3340 would
change the law so that spending from the FRF would be subject
to the annual appropriations process. The bill also would
direct FSOC to prepare financial reports that would be
submitted to the Congress each quarter and allow the public to
comment on FSOC's proposed rules and reports.
CBO estimates that enacting H.R. 3340 would reduce direct
spending by $1.3 billion over the 2016-2025 period; therefore
pay-as-you-go procedures apply. (Enacting the bill would not
affect revenues.) CBO estimates that implementing the bill
would cost the same amount over that period, assuming
appropriation of the necessary amounts.
CBO estimates that enacting the legislation would not
increase net direct spending or on-budget deficits in any of
the four consecutive 10-year periods beginning in 2026.
H.R. 3340 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary effect of H.R. 3340 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------------------------
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2016-2020 2016-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
Estimated Budget Authority................ 0 -133 -130 -134 -138 -142 -146 -150 -154 -158 -535 -1,285
Estimated Outlays......................... 0 -111 -132 -133 -137 -141 -145 -149 -153 -157 -513 -1,258
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level............. 0 133 130 134 138 142 146 150 154 158 535 1,285
Estimated Outlays......................... 0 111 132 133 137 141 145 149 153 157 513 1,258
--------------------------------------------------------------------------------------------------------------------------------------------------------
Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted early in calendar year 2016, the necessary
amounts will be appropriated each year, and spending will
follow historical patterns for operations of the FRF.
The Dodd-Frank Wall Street Reform and Consumer Financial
Protection Act established the Financial Research Fund to pay
the expenses of the OFR, and provided that the operating costs
of FSOC should be considered expenses of the OFR. Further, the
act provided that certain expenses of the Federal Deposit
Insurance Corporation also be treated as expenses of FSOC. All
of those costs are recorded in the budget as direct spending,
and are offset by assessments on certain bank holding companies
and nonbank financial companies. Those assessments are recorded
in the budget as revenues. Enacting the bill would not affect
the collection of those assessments.
Direct spending
H.R. 3340 would terminate the permanent spending authority
of the FRF, starting in fiscal year 2017, by requiring
expenditures from the FRF to be provided through the annual
appropriations process. Based on information from the agency,
CBO estimates that enacting this change to the method of
funding the FRF would reduce direct spending by about $1.3
billion over the 2016-2025 period. Because the bill would not
change the underlying responsibilities of the fund, CBO expects
that the operating costs of the FRF would remain the same.
Spending subject to appropriation
Because CBO expects that the operating expenses of the FRF
would remain the same under the bill, CBO estimates that
implementing the change in the method of funding the FRF would
cost $513 million over the 2016-2020 period, assuming
appropriation of the estimated amounts.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The changes in outlays that are subject to those pay-
as-you-go procedures are shown in the following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3340, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON NOVEMBER 4, 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------------------------
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2016-2020 2016-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN THE DEFICIT
Statutory Pay-As-You-Go Effect............ 0 -111 -132 -133 -137 -141 -145 -149 -153 -157 -513 -1,258
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increase in long term direct spending and deficits: CBO
estimates that enacting the legislation would not increase net
direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2026.
Intergovernmental and private-sector impact: H.R. 3340
contains no intergovernmental or private-sector mandates as
defined UMRA and would not affect the budgets of state, local,
or tribal governments.
Estimate prepared by: Federal Costs: Susan Willie; Impact
on State, Local, and Tribal Governments: Melissa Merrell;
Impact on the Private Sector: Logan Smith.
Estimate approved by: H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
H.R. 3340 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Duplication of Federal Programs
Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015),
the Committee states that no provision of H.R. 3340 establishes
or reauthorizes a program of the Federal Government known to be
duplicative of another Federal program, a program that was
included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most
recent Catalog of Federal Domestic Assistance.
Disclosure of Directed Rulemaking
Pursuant to section 3(i) of H. Res. 5, 114th Cong. (2015),
the Committee states that H.R. 3340 contains no directed
rulemaking.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section cites H.R. 3340 as the ``Financial Stability
Oversight Council Reform Act.''
Section 2. Funding
This section amends Section 155 of the Financial Stability
Act of 2010 to provide that funds in the Financial Research
Fund shall be available for the expenses of the FSOC and OFR as
provided for in appropriation Acts.
Section 3. Quarterly reporting
This section amends Section 153 of the Financial Stability
Act to require that the OFR report to Congress on a quarterly
basis about the status of its finances and workforce, as well
as actions taken to achieve the OFR's goals, objectives, and
performance measures.
Section 4. Public notice and comment period
This section amends Section 153(c) of the Financial
Stability Act of 2010 to require OFR to provide for a public
notice and comment period of not less than 90 days before
issuing any proposed report, rule, or regulation.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
FINANCIAL STABILITY ACT OF 2010
TITLE I--FINANCIAL STABILITY
SEC. 101. SHORT TITLE.
This title may be cited as the ``Financial Stability Act of
2010''.
* * * * * * *
Subtitle B--Office of Financial Research
* * * * * * *
SEC. 153. PURPOSE AND DUTIES OF THE OFFICE.
(a) Purpose and Duties.--The purpose of the Office is to
support the Council in fulfilling the purposes and duties of
the Council, as set forth in subtitle A, and to support member
agencies, by--
(1) collecting data on behalf of the Council, and
providing such data to the Council and member agencies;
(2) standardizing the types and formats of data
reported and collected;
(3) performing applied research and essential long-
term research;
(4) developing tools for risk measurement and
monitoring;
(5) performing other related services;
(6) making the results of the activities of the
Office available to financial regulatory agencies; and
(7) assisting such member agencies in determining the
types and formats of data authorized by this Act to be
collected by such member agencies.
(b) Administrative Authority.--The Office may--
(1) share data and information, including software
developed by the Office, with the Council, member
agencies, and the Bureau of Economic Analysis, which
shared data, information, and software--
(A) shall be maintained with at least the
same level of security as is used by the
Office; and
(B) may not be shared with any individual or
entity without the permission of the Council;
(2) sponsor and conduct research projects; and
(3) assist, on a reimbursable basis, with financial
analyses undertaken at the request of other Federal
agencies that are not member agencies.
(c) Rulemaking Authority.--
(1) Scope.--The Office, in consultation with the
Chairperson, shall issue rules, regulations, and orders
only to the extent necessary to carry out the purposes
and duties described in paragraphs (1), (2), and (7) of
subsection (a).
(2) Standardization.--Member agencies, in
consultation with the Office, shall implement
regulations promulgated by the Office under paragraph
(1) to standardize the types and formats of data
reported and collected on behalf of the Council, as
described in subsection (a)(2). If a member agency
fails to implement such regulations prior to the
expiration of the 3-year period following the date of
publication of final regulations, the Office, in
consultation with the Chairperson, may implement such
regulations with respect to the financial entities
under the jurisdiction of the member agency. This
paragraph shall not supersede or interfere with the
independent authority of a member agency under other
law to collect data, in such format and manner as the
member agency requires.
(3) Public notice and comment period.--The Office
shall provide for a public notice and comment period of
not less than 90 days before issuing any proposed
report, rule, or regulation.
(4) Additional report requirements.--
(A) In general.--Except as provided under
paragraph (3), the requirements under section
553 of title 5, United States Code, shall apply
to a proposed report of the Office to the same
extent as such requirements apply to a proposed
rule of the Office.
(B) Exception for certain reports.--This
paragraph and paragraph (3) shall not apply to
a report required under subsection (g)(1) or
section 154(d)(1).
(d) Testimony.--
(1) In general.--The Director of the Office shall
report to and testify before the Committee on Banking,
Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives annually on the activities of the
Office, including the work of the Data Center and the
Research and Analysis Center, and the assessment of the
Office of significant financial market developments and
potential emerging threats to the financial stability
of the United States.
(2) No prior review.--No officer or agency of the
United States shall have any authority to require the
Director to submit the testimony required under
paragraph (1) or other congressional testimony to any
officer or agency of the United States for approval,
comment, or review prior to the submission of such
testimony. Any such testimony to Congress shall include
a statement that the views expressed therein are those
of the Director and do not necessarily represent the
views of the President.
(e) Additional Reports.--The Director may provide additional
reports to Congress concerning the financial stability of the
United States. The Director shall notify the Council of any
such additional reports provided to Congress.
(f) Subpoena.--
(1) In general.--The Director may require from a
financial company, by subpoena, the production of the
data requested under subsection (a)(1) and section
154(b)(1), but only upon a written finding by the
Director that--
(A) such data is required to carry out the
functions described under this subtitle; and
(B) the Office has coordinated with the
relevant primary financial regulatory agency,
as required under section 154(b)(1)(B)(ii).
(2) Format.--Subpoenas under paragraph (1) shall bear
the signature of the Director, and shall be served by
any person or class of persons designated by the
Director for that purpose.
(3) Enforcement.--In the case of contumacy or failure
to obey a subpoena, the subpoena shall be enforceable
by order of any appropriate district court of the
United States. Any failure to obey the order of the
court may be punished by the court as a contempt of
court.
(g) Quarterly Reporting.--
(1) In general.--Not later than 60 days after the end
of each quarter, the Office shall submit reports on the
Office's activities to the Committees on Appropriations
of the House of Representatives and the Senate, the
Committee on Financial Services of the House of
Representatives, and the Committee on Banking, Housing,
and Urban Affairs of the Senate.
(2) Contents.--The reports required under paragraph
(1) shall include--
(A) the obligations made during the previous
quarter by object class, office, and activity;
(B) the estimated obligations for the
remainder of the fiscal year by object class,
office, and activity;
(C) the number of full-time equivalents
within the Office during the previous quarter;
(D) the estimated number of full-time
equivalents within each office for the
remainder of the fiscal year; and
(E) actions taken to achieve the goals,
objectives, and performance measures of the
Office.
(3) Testimony.--At the request of any committee
specified under paragraph (1), the Office shall make
officials available to testify on the contents of the
reports required under paragraph (1).
* * * * * * *
SEC. 155. FUNDING.
(a) Financial Research Fund.--
(1) Fund established.--There is established in the
Treasury of the United States a separate fund to be
known as the ``Financial Research Fund''.
(2) Fund receipts.--All amounts provided to the
Office under subsection (c), and all assessments that
the Office receives under subsection (d) shall be
deposited into the Financial Research Fund.
(3) Investments authorized.--
(A) Amounts in fund may be invested.--The
Director may request the Secretary to invest
the portion of the Financial Research Fund that
is not, in the judgment of the Director,
required to meet the needs of the Office.
(B) Eligible investments.--Investments shall
be made by the Secretary in obligations of the
United States or obligations that are
guaranteed as to principal and interest by the
United States, with maturities suitable to the
needs of the Financial Research Fund, as
determined by the Director.
(4) Interest and proceeds credited.--The interest on,
and the proceeds from the sale or redemption of, any
obligations held in the Financial Research Fund shall
be credited to and form a part of the Financial
Research Fund.
(b) Use of Funds.--
(1) In general.--Funds obtained by, transferred to,
or credited to the Financial Research Fund shall [be
immediately available to the Office] be available to
the Office, as provided for in appropriation Acts, and
shall remain available until expended, to pay the
expenses of the Office in carrying out the duties and
responsibilities of the Office.
[(2) Fees, assessments, and other funds not
government funds.--Funds obtained by, transferred to,
or credited to the Financial Research Fund shall not be
construed to be Government funds or appropriated
moneys.]
[(3)] (2) Amounts not subject to apportionment.--
Notwithstanding any other provision of law, amounts in
the Financial Research Fund shall not be subject to
apportionment for purposes of chapter 15 of title 31,
United States Code, or under any other authority, or
for any other purpose.
(c) Interim Funding.--During the 2-year period following the
date of enactment of this Act, the Board of Governors shall
provide to the Office an amount sufficient to cover the
expenses of the Office.
(d) [Permanent Self-funding] Assessment Schedule.--Beginning
2 years after the date of enactment of this Act, the Secretary
shall establish, by regulation, and with the approval of the
Council, an assessment schedule, including the assessment base
and rates, applicable to bank holding companies with total
consolidated assets of 50,000,000,000 or greater and nonbank
financial companies supervised by the Board of Governors, that
takes into account differences among such companies, based on
the considerations for establishing the prudential standards
under section 115, to collect assessments equal to the total
expenses of the Office.
* * * * * * *
MINORITY VIEWS
H.R. 3340 whittles away at the protections of the Dodd-
Frank Wall Street Reform and Consumer Protection Act.
Specifically, this bill would subject the Financial Stability
Oversight Council (the Council) and the Office of Financial
Research (OFR) to the Congressional appropriations process, and
require the OFR to solicit public comment prior to issuing any
report unlike any other federal agency.
The financial crisis of 2008 left millions homeless and
unemployed as a result of financial firms circumventing our
financial system's silos of regulation. Democrats created a
framework to detect, prevent and mitigate systemic risk. Title
I of the Dodd-Frank Act created the FSOC and the OFR to look
across those silos into all corners of the financial system for
systemic risk. The FSOC oversees and deters threats to the U.S.
financial markets, and the OFR supports the FSOC with
analytical research to better understand trends and
developments related to financial stability.
Both the OFR and the FSOC set their own budgets outside of
the appropriations process, and offset any spending by imposing
a fee on bank holding companies with more than $50 billion in
consolidated assets and nonbank financial companies supervised
by the Federal Reserve. This funding arrangement is similar to
how the bank regulators (Fed, OCC, FDIC, and NCUA) set and fund
their budgets. H.R. 3340 eliminates the independent budget
setting authority of the OFR and FSOC by requiring Congress to
first appropriate funds, but the b ill does not eliminate the
fee on financial institutions. As a result, if enacted, the OFR
and FSOC would be funded in a manner similar to the SEC. This
politicizes the FSOC and OFR and subjects them to the
micromanagement of Congress, when it is important to have just
the opposite--an assessment system that is impartial.
H.R. 3340 also requires the OFR to solicit public comment
for a period of at least 90 days prior to issuing a proposed
report, rule or regulation. Although this provision appears to
be a response to industry criticism to the OFR's publication of
a report examining the assessment management industry, the
requirement would essentially corrupt all of OFR's research by
requiring it to first tell the industry about what it is
considering studying. Congress should be doing whatever it can
to help OFR identify risks to our economy, and not stand in its
way.
For these reasons, we oppose H.R. 3340.
Maxine Waters.
Wm. Lacy Clay.
Carolyn B. Maloney.
Gwen Moore,
Ruben Hinojosa.
Gregory W. Meeks.
Juan Vargas.
Keith Ellison.
John C. Carney.
Joyce Beatty.
Bill Foster.
[all]