WASHINGTON A top official from the Financial Stability Oversight Council told House lawmakers on Tuesday that regulators are open to making its decision-making process more transparent, but did not name specific measures the council is considering.
Republicans and Democrats on the House Financial Services Committee's subcommittee on oversight and investigations pressed Patrick Pinschmidt, deputy assistant secretary of FSOC, over ongoing concerns about the council's designation process for systemically important institutions. Industry representatives and lawmakers on both sides of the aisle have raised concerns about the lack of information around how the council determines what companies pose a threat to the economy, a decision usually made at closed-door meetings.
Pinschmidt said the council continues to consider steps to increase transparency, telling Rep. Mike Fitzpatrick, R-Pa., that providing more information to the public "has been a continuous arc since the first meeting four years ago."
"There are have been a number of suggestions including from this committee and we've received suggestions by outside stakeholders and we expect in terms of at least the non-banks designations process the council will begin to evaluate potential changes there," he said. "What I would note is, the council shouldn't be frozen in its ways to the extent there's good feedback and suggestions out there that make sense, the council is open to considering those."
The FSOC announced in May that it would provide more details about its closed-door meetings, while defending the right to keep certain business information and deliberations confidential. However, the change has done little to mollify critics.
Rep. Patrick McHenry, R-N.C., chairman of the subcommittee, warned that the FSOC "may well be the least transparent federal entity in government."
"What this means for the companies that are potentially subject to a SIFI designation by the FSOC is that they must submit vast quantities of information demonstrating systemic risk and have no idea whether this information is reviewed, and if so, by whom," McHenry added. "Even Congress, which created the FSOC and its unprecedented authority, has been denied access to their process. The dearth of information in the FSOC's minutes makes it impossible for Congress to conduct effective oversight of the FSOC and to determine whether the agency has appropriately implemented the Dodd-Frank Act."
Several Democrats also pushed FSOC to release more details about its designation process.
"It's extraordinarily important that the process for designation and the communication and the transparency be done to the highest standard possible," said Rep. John Delaney, D-Md., pointing to the impact a SIFI designation can have on a business and the larger industry.
Nicole Clowers, director of the financial markets and community investment team at the Governoment Accountability Office, also testified about the FSOC's transparency on Tuesday, providing updates to a 2012 report the agency conducted.
Clowers tesitified that GAO found the FSOC has taken steps to improve its policies and procedures, but the government watchdog suggested a number of additional measures to improve the council's risk identification, transparency and coordination efforts.