The Financial Technology Association joined a coalition of trade associations in a letter urging the Financial Stability Oversight Council (FSOC) to restore its 2019 Guidance governing the designation of nonbank financial institutions as systemically important financial institutions (“SIFI”).
In the letter, the trades emphasize that the 2019 Guidance “prioritized an activities-based approach to systemic risk and instituted strong due process provisions, including a clear commitment to conduct a cost-benefit analysis and assess the likelihood of financial distress or failure for any nonbank finance company under consideration for designation.”
Unfortunately, “the most recent 2023 Guidance took a step backwards by widening the definition of ‘threat to the financial stability of the US,’ expanding the industries and activities that could be designated, and eliminating the aforementioned due process provisions,” wrote the trades.
FTA is committed to working with policymakers to ensure a clear, analytically grounded, and transparent approach to nonbank financial stability oversight.
FTA Joins Coalition Urging Caution on FSOC’s Proposed Nonbank Designation Guidance
The Financial Technology Association joined a coalition of trade associations in a letter urging the Financial Stability Oversight Council (FSOC) to restore its 2019 Guidance governing the designation of nonbank financial institutions as systemically important financial institutions (“SIFI”).
In the letter, the trades emphasize that the 2019 Guidance “prioritized an activities-based approach to systemic risk and instituted strong due process provisions, including a clear commitment to conduct a cost-benefit analysis and assess the likelihood of financial distress or failure for any nonbank finance company under consideration for designation.”
Unfortunately, “the most recent 2023 Guidance took a step backwards by widening the definition of ‘threat to the financial stability of the US,’ expanding the industries and activities that could be designated, and eliminating the aforementioned due process provisions,” wrote the trades.
FTA is committed to working with policymakers to ensure a clear, analytically grounded, and transparent approach to nonbank financial stability oversight.
Read the full joint trades letter here.