Dodd-Frank Act - Title 1: Financial Stability (Part 1)
To oversee financial stability f the system a Financial Stability Oversight Council was formed. This council will be chaired by the Secretary of Treasury. Its voting members include heads of Treasury, Federal Reserve, OCC, SEC, FDIC,FHFA, CFTC, NCUA and the Bureau of Consumer Financial Protection . It also includes a President nominated insurance expert, who is confirmed by the Senate.
The Council aims at identifying risks to the financial stability of the US economy. This risk could arise from material financial failure. It could be from the activities of large financial corporation or non-banking financial institutions. It will oversee risks stemming from outside the Financial services marketplace. It is responsible to promote market discipline by eliminating the expectations from shareholders, creditors and other counterparties of a government bailout in the event of a failure by the company.
Following are the some of the Council’s key duties:
- Collect information from member agencies.
- Monitor the financial services marketplace
- Monitor domestic and international financial regulatory proposals and developments. Provide advice to Congress in areas to increase integrity, efficiency, competitiveness and stability.
- Facilitate information sharing and co-ordination among member agencies.
- Identify gap in regulation that could affect the US economy
- Make recommendations to the Board of Governors to better help establish prudential standards for risk based capital, leverage, liquidity, contingent capital, public disclosures, and overall risk management for NBFC’S.
- Annually report ad testify before Congress. As part of the Council’s annual report to Congress, each voting member must submit a signed statement attesting that all reasonable steps are being taken to ensure financial stability and mitigate systemic risk, or state what additional steps the voting member believes should be taken.
Sub elements under Title 1 include:
- Authority to require supervision and regulation of certain non-bank financial companies.
- Registration of non-bank financial companies supervised by the Board of Governors.
- Enhanced supervision and prudential standards for non-bank financial
- Companies supervised by the Board of Governors and certain bank holding companies.
- Treatment of certain companies that cease to be bank holding companies.
- Council funding.
- Resolution of supervisory jurisdictional disputes among member agencies.
- Additional standards applicable to activities or practices for financial stability purposes.
- Mitigation of risks to financial stability.
- GAO Audit of Council.
- Study of the effects of size and complexity of financial institutions on capital market efficiency and economic growth.
Subtitle B—Office of Financial Research
- Office of Financial Research established.
- Purpose and duties of the Office.
- Organizational structure; responsibilities of primary programmatic units.
- Transition oversight.
- Additional Board of Governors Authority for Certain Non bank Financial Companies and Bank Holding Companies
- Reports by and examinations of non bank financial companies by the
- Board of Governors.
- Prohibition against management interlocks between certain financial companies.
- Enhanced supervision and prudential standards for non bank financial companies supervised by the Board of Governors and certain bank holding companies.
- Early remediation requirements.
- Avoiding duplication.
- Safe harbor.
- Leverage and risk-based capital requirements.
- Examination and enforcement actions for insurance and orderly liquidation purposes.
- Access to United States financial market by foreign institutions.
- Studies and reports on holding company capital requirements.
- International policy coordination.
- Rule of construction.