Bill Summary
The "Financial Stability Oversight Council Improvement Act of 2025" seeks to amend the Financial Stability Act of 2010 by introducing a requirement for the Financial Stability Oversight Council (FSOC) to explore alternative regulatory approaches before designating a U.S. nonbank financial company for supervision by the Federal Reserve Board. Specifically, the bill mandates that the Council must consult with the company in question and its primary financial regulator to assess whether less drastic measures could adequately address any potential threats to financial stability. This aims to ensure that the FSOC thoroughly evaluates all possible options, including heightened regulatory standards, before making such a significant supervisory determination.
Possible Impacts
The "Financial Stability Oversight Council Improvement Act of 2025" could affect people in the following ways:
1. **Enhanced Oversight for Nonbank Financial Companies**: By requiring the Financial Stability Oversight Council (FSOC) to consider alternative approaches before determining whether a nonbank financial company should be supervised by the Federal Reserve, the legislation may lead to a more tailored and potentially less burdensome regulatory environment for these companies. This could result in more stability in financial services, which might benefit consumers through improved access to credit and financial products.
2. **Increased Transparency and Communication**: The requirement for the FSOC to consult with the affected nonbank financial company and its primary regulatory agency before making determinations could lead to increased transparency in the regulatory process. This could empower consumers and businesses by providing them with a clearer understanding of how their financial institutions are regulated and the criteria used to evaluate their stability, potentially enhancing consumer confidence in the financial system.
3. **Potential for Greater Financial Innovation**: By allowing for alternative actions and plans that a company might propose to mitigate threats to financial stability, the legislation may encourage nonbank financial companies to innovate and develop new financial products or services. This could lead to more competitive offerings in the market, potentially benefiting consumers with better rates, lower fees, or more varied financial options.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3578 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 3578
To amend the Financial Stability Act of 2010 to require the Financial
Stability Oversight Council to consider alternative approaches before
determining that a U.S. nonbank financial company shall be supervised
by the Board of Governors of the Federal Reserve System, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 18, 2025
Mr. Rounds (for himself and Mr. Peters) introduced the following bill;
which was read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Financial Stability Act of 2010 to require the Financial
Stability Oversight Council to consider alternative approaches before
determining that a U.S. nonbank financial company shall be supervised
by the Board of Governors of the Federal Reserve System, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Financial Stability Oversight
Council Improvement Act of 2025''.
SEC. 2. FINANCIAL STABILITY OVERSIGHT COUNCIL.
Section 113 of the Financial Stability Act of 2010 (12 U.S.C. 5323)
is amended--
(1) in subsection (a)--
(A) in paragraph (1), by striking ``The Council''
and inserting ``Subject to paragraph (3), the
Council''; and
(B) by adding at the end the following:
``(3) Initial determination.--The Council may not vote on a
proposed determination with respect to a U.S. nonbank financial
company under paragraph (1) unless the Council first
determines, in consultation with the company and the primary
financial regulatory agency with respect to the company, that a
different action by the Council or the agency (including the
application of new or heightened standards and safeguards under
section 120), or by the company under a written plan that is
submitted promptly to the Council, is impracticable or
insufficient to mitigate the threat that the company could pose
to the financial stability of the United States.''; and
(2) in subsection (f)(1), by striking ``subsection (e)''
and inserting ``subsections (a)(3) and (e)''.
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