WASHINGTON — Treasury Secretary Jacob Lew presided over his first Financial Stability Oversight Council meeting on Thursday only hours after being sworn into his position by President Obama.
The move came just a day after the Senate confirmed Lew and suggested that the new secretary is committed to making FSOC a priority.
"Since the council was created almost three years ago, it has been doing pretty good work to coordinate amongst regulators and move financial reform in the right direction," said Lew, in his first official meeting as secretary.
Lew said regulators would continue to coordinate and work together quickly even when unconventional episodes like Hurricane Sandy may occur.
"The council has made significant progress to promote market stability by taking actions to issue rules, identify risks, and increase oversight," said Lew.
The council, comprised of 15 regulators including Federal Reserve Board Chairman Ben Bernanke, Federal Deposit Insurance Corp. Chairman Martin Gruenberg, and Comptroller of the Currency Thomas Curry, continued to discuss efforts on Thursday to designate nonbank financial companies as systemically important, according to Treasury spokeswoman Suzanne Elio.
Regulators have yet to name which nonbanks are under consideration in this final phase, and said they would continue to keep that confidential until a final decision is made.
"The council does not intend to publicly announce the name of any nonbank financial company that is under evaluation before a final determination with respect to such company," said Elio.
Under the Dodd-Frank Act, FSOC was given authority to designate nonbank financial institutions that could pose a risk to the financial system. Many expect American International Group, for example, to be among the first SIFI designations. AIG has previously said it meets the thresholds set by the council to decide which firms require further review.
Once designated by the council, these firms will face a tougher set of supervisory standards and will be required to prepare and file a plan with regulators detailing how they could be safely unwound if the company is on the brink of failure. Still, it's unclear exactly what additional capital and liquidity requirements those nonbank firms would face under the Federal Reserve Board's supervision.
Members of the council also received an update from the Securities and Exchange Commission on progress to reform the money market mutual fund industry. They were also briefed about the impact the agency's 2010 reforms have had on the industry. Staff also presented an overview of comments received on the council's proposed recommendations to revamp the industry.
In November, the FSOC released three proposed recommendations to reform the industry utilizing its authority under Dodd-Frank. The move by the council, which was supported by former Chairman Mary Schapiro, was intended to break through a logjam at the SEC, after Schapiro had been unable to win board approval to move forward with the agency's own reform plan.