§5330 Additional Standards Applicable to Activities or Practices for Financial Stability Purposes

Summary

The Financial Stability Oversight Council can tell the main financial regulators to tighten rules for certain activities by bank holding companies or nonbank financial companies. It can do this when the way an activity is done, how big or concentrated it is, or how connected it is could cause money problems—like runs on cash, loan losses, or trouble spreading through markets—or could hurt low-income, minority, or underserved communities. Before making a recommendation, the Council must talk with the regulators, give public notice, and allow comments. The Council must weigh long-term economic costs and can suggest limits, extra capital or risk controls, or bans, including the kinds of standards listed elsewhere in the law. Each relevant regulator can adopt, enforce, and examine compliance with the recommended rules for the firms it oversees. Within 90 days of a recommendation, the regulator must adopt the Council’s standards, adopt similar acceptable standards, or explain in writing why it will not. The Council must report to Congress about its recommendations, whether regulators implemented them, and suggest laws if no regulator exists for a risky nonbank firm. If the Council later says a rule is no longer needed, the regulator will decide whether to keep it and must set up a process for firms to appeal that decision.