FSOC Publishes Annual Assessment of Financial Risks

May 21st, 2015

The Financial Stability Oversight Council (FSOC) published its fifth annual report earlier this week.  The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires the FSOC to report on emerging financial threats and regulatory developments. Emergent concerns to the stability of the financial sector include cyberattacks, “potential severe interest rate shocks,” and “potential foreign shocks.”

The report identifies areas in need of additional oversight and investigation.  The FSOC raised concerns about unregulated products and services.  And although “substantial progress has been made toward reform of benchmark rates,” regulators will continue their assessment of related market practices.  The report calls on financial service regulators to enhance the use of data in regulatory examination and resolve housing finance reform.

Considering that the FSOC includes representatives from nearly ever major financial regulator, including the Treasury, Federal Reserve, Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and Consumer Financial Protection Bureau (CFPB), the findings of the report will likely shape regulatory and enforcement agendas over the next year.

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