Washington, D.C. – Today Senator Tom Cotton (R-Arkansas) and nine of his colleagues on the Senate Banking Committee sent a letter to Secretary of the Treasury Steve Mnuchin expressing strong support for the Department of the Treasury to use all tools available to end the Financial Stability Oversight Council’s (FSOC) ‘Too Big To Fail’ policies and to ensure taxpayers are not responsible for any new bailouts. Among its many flaws, Dodd-Frank enshrined ‘Too Big To Fail’ as an official policy by creating a Federal council to designate nonbanks as “systemically important financial institutions”. These designations offer large firms implicit taxpayer backing for future bailouts and result in massive new regulatory costs. FSOC’s recent designation of a nonbank was overturned by a Federal judge for being arbitrary and capricious.
In addition to Senator Cotton, Senators Pat Toomey (R-Pennsylvania), Richard Shelby (R-Alabama), Mike Crapo (R-Idaho), Mike Rounds (R-South Dakota), John Kennedy (R-Louisiana), Ben Sasse (R-Nebraska), David Perdue (R-Georgia), Thom Tillis (R-North Carolina), and Tim Scott (R-South Carolina) also signed the letter.
The Senators expressed concern that the inconsistent practices currently used by the FSOC result in burdensome, unnecessary regulatory costs that ultimately make American companies less competitive around the world.
The full text of the letter is below. Additionally, a PDF of the letter can be found here.
The Honorable Steven Mnuchin
Secretary of the Treasury
U.S. Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, DC 20500
Dear Secretary Mnuchin,
We write in strong support of President Trump’s Executive Order setting core principles for regulating the United States financial system. As part of your review and report on the existing laws, regulations, guidance and government policies “that inhibit Federal regulation of the United States financial system in a manner consistent with the Core Principles,” we hope that you will review the policies and procedures underlying the Financial Stability Oversight Council’s (FSOC) determination that a nonbank financial company shall be subject to supervision by the Board of Governors of the Federal Reserve System and subject to enhanced prudential standards.
The FSOC’s process for designating non-bank systemically important financial institutions lacks transparency and accountability, insufficiently tracks data, and does not have a consistent methodology for determinations. Consequently, the designation process has created substantial new regulatory costs while putting taxpayers on the hook for any future bailout to these firms. It frustrates the ability of American companies to be competitive with foreign firms, while thwarting economic growth.
Please know you have our strong support for using all the tools available as Secretary of Treasury to end ‘Too Big To Fail’ and ensure that hard-working Americans are not responsible for any new bailouts.
Senator Tom Cotton, R-Arkansas
Senator Pat Toomey, R-Pennsylvania
Senator Richard Shelby, R-Alabama
Senator Mike Crapo, R-Idaho
Senator Mike Rounds, R-South Dakota
Senator John Kennedy, R-Louisiana
Senator Ben Sasse, R-Nebraska
Senator David Perdue, R-Georgia
Senator Thom Tillis, R-North Carolina
Senator Tim Scott, R-South Carolina