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House Passes Bill to Reform FSOC Systemic Risk Designation Process

"Since FSOC was created, lawmakers and administration officials have debated the process of determining if a firm poses a risk to our financial system. ... This bipartisan legislation strengthens FSOC’s ability to identify and address emerging threats to financial stability and consumers by promoting a more consistent, accountable, and effective approach to oversight."
Bill Foster, U.S. Representative
"Since FSOC was created, lawmakers and administration officials have debated the process of determining if a firm poses a risk to our financial system. ... This bipartisan legislation strengthens FSOC’s ability to identify and address emerging threats to financial stability and consumers by promoting a more consistent, accountable, and effective approach to oversight."
Bill Foster, U.S. Representative

The U.S. House of Representatives passed bipartisan legislation to reform how the Financial Stability Oversight Council ("FSOC") determines whether a financial firm is systemically important to the financial system.

The bill requires the FSOC to evaluate whether targeted regulatory alternatives can address potential risks to financial stability before designating a non-bank financial company as a Systemically Important Financial Institution. The legislation mandates that the FSOC work with a company and its primary regulator to mitigate risks associated with specific business activities prior to imposing firm-level designations.

MFA President and CEO Bryan Corbett called the requirement to consider targeted alternatives a "commonsense safeguard against overreach." He noted that alternative asset managers already operate under "robust SEC oversight" and said the bill adds "transparency and accountability" to the designation process.

ICI President and CEO Eric Pan called the legislation "a win for investors." He said the bill strengthens the role of primary regulators, provides "due process for affected firms," and "preserves designation as a last resort."

SIFMA President and CEO Kenneth E. Bentsen, Jr. said the legislation would bring clarity and consistency to the FSOC’s designation process by establishing "clear statutory guardrails" and "ensuring that SIFI designations are used only as a last resort." He said the bill would reduce market uncertainty and promote stability and predictability in the FSOC’s oversight of non-bank financial companies.

Primary Sources

  1. U.S. House Committee on Financial Services: Financial Stability Oversight Council Improvement Act of 2025
  2. MFA: News & Blog: MFA statement on House passage of FSOC reform bill
  3. ICI: News Release: ICI Welcomes Passage of Bipartisan FSOC Reform Bill
  4. SIFMA: Press Release: SIFMA Statement on the Financial Stability Oversight Council Improvement Act of 2025
  5. Congressman Bill Foster: Press Release: Rep. Foster’s Bipartisan FSOC Improvement Act Passes House

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  • House Lawmakers Introduce FSOC Reform Bill

    Bipartisan members of the House Financial Services Committee introduced a bill that would require the Financial Stability Oversight Council to explore and rule out alternative regulatory approaches before designating nonbank financial institutions as systemically important.

Tags

Regulated Activities
Risk Management Supervision / Compliance
Regulated Entities
Banking Entities
Body of Law
Banking Law
Jurisdiction
US - Federal
Organization
Trade / Industry Associations US Congress
Sub-Author
ICI, Managed Funds Association, SIFMA