"As they go forward now, I think they'll be less fulfilling the clear statutory mandate and thinking more about the issues and thinking more about ways they will want to proceed," said Satish Kini, who co-chairs the banking group at Debevoise & Plimpton LLP. "I think what we're coming to in 2013 is a pivot point where they're doing more than just designating nonbank firms and designating payment systems and thinking more about emerging threats and thinking about where they want to make a statement."
While the council has often been criticized for the scripted nature of its brief public meetings, behind closed doors principals have met a dozen times in the last year — well beyond the four annual meetings statutorily required under Dodd-Frank.
"What strikes me is no one ever misses a meeting," said Miller. "We have a lot of meetings. People want to be at these meetings, which is good. I think people come because they recognize that matters of importance are going to be discussed and they may be called upon to provide their views, so people generally come prepared to share."
Observers say that is a sign that officials sitting on the council believe in its usefulness.
"If you are meeting that much it suggests you are really gelling as a group," said Ernest Patrikis, a partner with White & Case LLP and former general counsel of the New York Federal Reserve. "This is a successor of the President's Working Group. Part of it was to get the principals in the room to talk and get the views on the table and that's just invaluable. When crisis time comes it just makes things easier."
To be sure, the frequency of FSOC meetings was also likely driven by events of the past year, such as the failure of MF Global Inc., JPMorgan Chase & Co.'s multibillion-dollar trading loss, the Libor scandal, and then finally Hurricane Sandy. (The council is comprised of 15 total regulators.)
In the case of Hurricane Sandy — which ripped through New York, New Jersey and Connecticut — regulators met twice during the week of the storm to discuss the impact on the financial system. Each respective FSOC agency raised its particular concerns. For state banking regulators, it was the availability of cash and the ability of their banking networks to work across state lines. The SEC was concerned about reopening stock exchanges. The Commodity Futures Trading Commission focused on overnight liquidity and effects on the derivatives markets in Chicago, and the Federal Housing Finance Agency discussed foreclosure relief to homeowners affected by the storm.
"This was a great example of how this organization can work," Miller said. "We have a natural disaster hitting the largest financial center and you're not going through your rolodex to figure out who to call. It's already built, it's already in place."
Miller said the council's work has also been a priority for Geithner.
"This secretary has been very interested in building the institution, getting the machinery working, getting people regularly together and involved," she said.
Still, some observers are skeptical that the FSOC, which following Dodd-Frank's enactment seemed agonizingly slow at getting off the ground, is doing its job as a systemic regulator and eliminating the perception that some banks are too big to fail.
"You don't hear a lot of chatter about what FSOC is doing that would give anybody more confidence that we are less systemically at risk than we were before," said Cornelius Hurley, director of the Boston University Center for Finance, Law & Policy. "Dodd-Frank says the FSOC should be eliminating this perception. If you take a macro view of the whole situation there's an even greater perception that the system is at risk of a half-dozen institutions failing one at a time. By that yard stick you would have to give them a low grade."