Eight of the 10 voting members of the Financial Stability Oversight Council (FSOC) appeared before the House Financial Services Committee Dec. 8 to discuss the FSOC’s efforts, activities, objectives and plans, and to answer questions about the its annual report. Several of the committee members voiced their concerns about FSOC’s lack of transparency and its “systemically important financial institution” (SIFI) designations of MetLife, Inc. and Prudential Financial, Inc.
“FSOC has earned bipartisan condemnation for its lack of transparency. Two-thirds of its proceedings are conducted in private. Minutes of those meetings are devoid of any useful substantive information on what was discussed,” Committee Chairman Rep. Jeb Hensarling (R-Texas) said in his opening statement.
Rep. Sean Duffy (R-Wis.), who is the chairman for the subcommittee on oversight and investigations, took issue with FSOC’s not sharing information on the designations of MetLife and Prudential. Duffy pressed the matter of transparency by stating that the committee received more information from the FBI regarding ISIS than it did from FSOC.
Federal Deposit Insurance Corp. (FDIC) Chairman Martin Gruenberg and Commodity Futures Trading Commission (CFTC) Chairman Timothy Massad both responded that the information sought by the committee was not shared because was considered confidential supervisory information and non-public information. Witnesses also avoided answering questions regarding the MetLife designation because MetLife is appealing FSOC’s decision in federal court.
Duffy also expressed concerns that the only voting “insurance expert” on FSOC, Roy Woodall, who also appeared before the committee, was the only dissenter in the decisions to designate MetLife and Prudential as SIFIs.
National Credit Union Administration (NCUA) Chairwoman Debbie Matz asserted that FSOC’s voting members were not examining the companies’ insurance business but only their financial arms. Also, jumping on the issue of expertise was Rep. Al Green (D-Texas), who asked Woodall whether he considered himself a banking expert and whether he voted on any designations regarding banking.
“Much had been made of the fact that Woodall was the only insurance expert on the panel,” Green said, later asking whether the judge that has been appointed to hear the MetLife case should be an insurance expert to hear the case.
Also appearing before the committee was Securities and Exchange Commission Chairwoman Mary Jo White, Federal Housing Finance Agency Director Melvin Watt, Consumer Financial Protection Bureau Director Richard Cordray and Office of the Comptroller of the Currency Comptroller Thomas Curry. Federal Reserve Chair Janet Yellen was absent along with Treasury Secretary Jack Lew, who testified earlier this year.
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