The Financial Stability Oversight Council, facing critics who say it's a secretive group with minimal oversight itself, has promised to be more forthcoming about its closed-door meetings.

In a two-page statement on the issue, the FSOC defended its right to hold private sessions where market-sensitive information is discussed, but said it would improve efforts to disclose more details about the meetings, including their agendas, plus any specific reasons for keeping a session closed to the public.

The promise for enhanced transparency, made in the council's annual report released on May 7, follows recent criticism by lawmakers on Capitol Hill.

"Currently, FSOC is a complete black box," says Rep. Scott Garrett, R-N.J., who vented his frustrations at an American Enterprise Institute event.

Garrett, the chairman of the House subcommittee on capital markets and government-sponsored enterprises, had sought to attend a closed-door meeting of the FSOC on March 27, but was rebuffed.
"When independent financial regulators meet to formalize new rule proposals, those meetings are almost always open to the public and members of Congress," Garrett says. "I don't see why FSOC should be any different."

Garrett recently introduced legislation that would open FSOC meetings to greater participation by lawmakers and by regulators, including the Securities and Exchange Commission. The FSOC, headed by Treasury Secretary Jack Lew, came under fire recently from two SEC commissioners who accuse the council of undercutting the agency's work.

Garrett's proposal would allow board members at all relevant agencies to participate in FSOC meetings, and would require that votes be taken first by the full agency board before a principal from the agency brings the vote to the FSOC.

The bill also would open up meetings to lawmakers serving on related oversight committees and would subject the council to the Federal Advisory Committee Act and the Government in the Sunshine Act, two existing governance and transparency laws.

In its policy statement, the FSOC argues that it makes sense to keep meetings closed when regulators plan to discuss particular information about individual firms that is considered confidential.

"Protection of this information will be necessary in order to prevent destabilizing market speculation that could occur if that information were to be disclosed," the FSOC's policy reads.

Still, the FSOC says it will provide an agenda and at least seven days notice for scheduled sessions, along with the time and place for any open meeting, or specific reasons for why a meeting has been kept closed.

The council also pledges to release information about the meeting "as soon as practicable" on its website.

Going beyond its previous policy, the council says it will release minutes from each meeting "immediately following its next regularly scheduled meeting," but with a caveat that the minutes could be subject to redactions.

Roy Woodall, the FSOC's independent insurance expert, endorsed the council's "incremental" step toward greater transparency, but also noted that Congress understood in creating the group that its work would not always benefit from public disclosure.

"The nature of the council's work is highly sensitive, which is recognized by Congress when it exempted it from the Sunshine Act and other governance laws," Woodall says.

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