WASHINGTON — Rep. Patrick McHenry, R-N.C., chairman of the House Financial Services Committee, wrote to Treasury Secretary Janet Yellen objecting to the
The Biden administration in April set the wheels in motion to rollback a Trump-era rule that prohibited FSOC from declaring nonbanks as systemically important, which would subject those nonbanks to a bevy of potentially costly rules.
The proposal — which was published after the failures of Silicon Valley Bank and Signature Bank — deals primarily with nonbanks, but McHenry said the turmoil in the industry throws into sharp clarity for policymakers that institutions thought not to be systemically risky could be under the right circumstances.
"The actions are contrary to the due process protections afforded by the Constitution and mark a sea change in the longstanding principles the Council uses to review these entities," McHenry said in the letter. "If left unaddressed, the actions will set a dangerous precedent that will have consequences for the broader financial system."
Republican pushback the FSOC's decision
"You don't like something? Well let's just have FSOC label it as risky and regulate it away," McHenry
That puts a timeline on FSOC, which plans to meet in a closed session on Friday, to move forward with making any designations.
