Financial Stability Oversight Council Improvement Act of 2017

Floor Speech

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Mr. HUIZENGA. Mr. Speaker, I want to say I am going to miss both the chairman and the gentleman from Florida (Mr. Ross) after they leave this term.

I am going to try to address the ranking member's timing issue, but the fact is that much of this bill simply codifies what FSOC's current process is and, thus, is not changing that timing.

Mr. Speaker, I rise today in support of H.R. 4061, the Financial Stability Oversight Council Improvement Act of 2017, which would enhance transparency and procedural fairness for the nonbank systemically important financial institutions designation process.

Dodd-Frank created FSOC and charged it with identifying risks to the financial stability of financial companies that would pose a threat to our overall financial stability. The problem with this is that FSOC has the authority to designate a nonbank financial institution, such as an asset manager or an insurance company, and subject the institution to heightened prudential supervision and regulation by the Federal Reserve.

All you hear from the other side is that this is about megabanks. It is the exact opposite. It is about these insurance companies and these asset managers and broker dealers.

In 2014, FSOC designated MetLife, a life insurance company, for ``heightened prudential supervision'' by the Federal Reserve. However, in 2016, a Federal district court rescinded FSOC's SIFI designation of MetLife, finding that it was ``arbitrary and capricious'' and that the FSOC had ``made critical departures'' from its own standards from making designation determinations.

Now, I wasn't there when Dodd-Frank was created, but I have been dealing with the echo effect of it for the last 7 years, and I don't believe this is what Congress intended. I don't believe that the architects--in fact, I can't believe that the architects--of Dodd-Frank intended for bank regulators to rewrite the rules of insurance companies.

As The Wall Street Journal wrote: ``It's as if a committee of baseball umpires rewrote the rules of football despite protests from the NFL players, owners, and referees.''

Let me give a personal example. My political science degree should then qualify me to be a chemical lab scientist. Hey, they both have science in the title.

It doesn't make sense.

In fact, even Barney Frank, the law's namesake, told Congress that, in general, he did not believe that companies ``that just sell insurance'' should be designated as systemic.

Well, today we have the ability to right the ship. By passing this important bill, Congress has the opportunity to bring about commonsense, bipartisan reforms to this designation process. And this is what American, hardworking taxpayers expect out of us: an ability to find a solution.

Specifically, the Financial Stability Oversight Council Improvement Act of 2017 would amend the Dodd-Frank Act to require FSOC to determine whether to subject a U.S. or a foreign nonbank financial company to supervision by the Federal Reserve, must consider the appropriateness of imposing heightened prudential standards as opposed to other forms of regulation to mitigate identified risks to the financial stability. In other words, as my friend from Florida said, don't go butterfly hunting with a sledgehammer.

H.R. 4061 directs FSOC to reevaluate, both annually and periodically, final determinations of systemic risk regarding a nonbank financial company under supervision.

Finally, the bill directs the FSOC to study the impacts of its determinations to nonbank financial companies to Fed supervision and prudential standards and whether such determinations have the intended result of improving domestic financial stability every 5 years.

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Mr. HUIZENGA. I would like to commend the bipartisan work of my colleagues and friends, Representative Ross and Representative Delaney. They have done a great job on this. Their bipartisan approach enhances the ability of FSOC to mitigate risk, a very important element, but it also ensures that affected nonbank--again, nonbank--financial institutions are afforded the opportunity and the ability to question and engage--not veto, but to question and engage--the FSOC prior to a final SIFI designation being made.

This is good work that gives hardworking taxpayers a solution, and this is what they expect: commonsense, bipartisan solutions. I encourage all of my colleagues to vote ``yes'' on this important bill.

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