Associations Urge House Members to Support FSOC Improvement Act

A broad set of financial, business, and crypto trade associations urged members of the U.S. House of Representatives to support the Financial Stability Oversight Council Improvement Act of 2025 ("FSOC Improvement Act").

In the letter, the associations warned that since 2010, FSOC guidance has shifted the activities-based approach to systemic risk and introduced "significantly different approaches" to "address systemic risk and the possible designation of nonbank financial companies." The associations emphasized that focusing on financial activities, rather than individual firms, better identifies regulatory gaps and promotes consistent oversight across the financial system. They cautioned that designating nonbank companies for Federal Reserve supervision could lead to duplicative and burdensome regulation, creating mismatches with firms’ business models and undermining U.S. competitiveness.

The associations said that the FSOC Improvement Act would restore balance, accountability, and transparency to FSOC’s framework. They explained that the FSOC Improvement Act would enhance transparency, predictability, and due process in the FSOC’s designation of nonbank financial companies. They said the Act would require the FSOC to consult directly with a company and its primary regulator, consider alternative regulatory tools, and conduct a robust cost-benefit analysis before making a designation. The associations also said that these procedural safeguards would ensure that designations remain a tool of last resort and that oversight responsibilities align with each firm’s existing regulatory framework.