Financial Stability Oversight Council Improvement Act of 2025

Floor Speech

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Mr. HUIZENGA. Mr. Speaker, I thank my friend and colleague, Mr. Foster, on the other side for working on this.

Mr. Speaker, I rise today in strong support of Mr. Foster's legislation, the Financial Stability Oversight Council Improvement Act, and urge its immediate adoption.

Mr. Speaker, in response to the 2008 financial crisis, Congress, under the Dodd-Frank Act, created the Financial Stability Oversight Council, known as FSOC, as the chairman was talking about, and tasked them with preventing systemic risk. It was absolutely a worthwhile and needed endeavor.

However, in the early years, the FSOC was given broad-reaching authorities to designate nonbanks as systemically important financial institutions, otherwise known as SIFIs.

During President Trump's first administration, the FSOC moved to an activities-based approach in 2019, which I think was an appropriate response in a post-MetLife court case world where the Federal Government lost because of aggressive overreach. In fact, the judge used the phrase ``excessive and capricious.''

Four years later in 2023, under former President Biden, I believe the FSOC snapped right back into using those faulty analytical frameworks for identifying and dealing with systemic risks.

Just last week, in testimony before the House Committee on Financial Services, Treasury Secretary Bessent emphasized on multiple occasions that the so-called activities-based approach would be preferred.

We agree.

Unfortunately, this back-and-forth guidance has not allowed businesses to plan for the future or make new investments.

Mr. Speaker, why does a SIFI designation actually matter? Many people watching might ask themselves that. Well, as history has taught us, it is a broad-reaching issue that can have some very negative consequences. Excessive regulatory scrutiny and additional costs can change the way nonbanks conduct business.

Mr. Speaker, we cannot continue applying banklike regulations to nonbanks that have fundamentally different business models and roles within the American economy.

The Financial Stability Oversight Council Improvement Act, on which I am a proud co-lead with Mr. Foster, makes a critical improvement to the current law.

Before a vote to designate a financial company as a SIFI, the FSOC must first consult with the company and then its primary regulator to determine whether alternative actions that could be proposed would be sufficient or insufficient to address risks to U.S. financial stability.

Well, amazingly, Mr. Speaker, those two things didn't exist previously. There was no consultation or discussion with the companies, and there was no consultation with those regulators. That was a flaw. Importantly, the Council may not then vote on a proposed designation unless this determination is made.

Let me remind my colleagues that the SIFI designation process has been flawed from the start. First, it targeted individual companies for designation without any process or notice.

Second, it failed to evaluate whether designation would actually mitigate risks or weigh the costs and benefits to the company, its shareholders, and ultimately the financial system.

Third, the old system failed to give SIFI designees due process or an opportunity to address the perceived risk before designation. As a reminder, the MetLife case took years to settle.

Lastly, it failed to incorporate the views of the primary regulator, who typically would have better insight into a company's financial standing.

Mr. Speaker, I believe H.R. 3682 adequately addresses these concerns and improves the Council's approach to addressing financial stability risks while creating a stronger, more predictable, and more stable regulatory environment for all.

Mr. Speaker, I again thank my colleague for yielding, and I urge my colleagues to support the Financial Stability Oversight Council Improvement Act.

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