(Bloomberg) — The Trump administration is letting the financial industry make its case that a super regulator set up to prevent a repeat of the 2008 crisis should be reined in.
At a closed-door meeting in Washington Thursday, lobbying groups for banks, securities firms and banks argued to Treasury Department officials that the Financial Stability Oversight Council should revamp its approach, according to people with direct knowledge of the topics discussed. Industry participants said the council should stop tagging companies as "systemically important," a label that subjects them to greater scrutiny. The groups also want it to be easier for firms that have been called out as risky to escape the additional oversight.
The Treasury officials were receptive to the industry's ideas, said the people who asked not to be named because the meeting was private.
FSOC, a panel of regulators that includes the Treasury and the Federal Reserve, has authority to declare nonbank financial firms systemically important, which subjects them to tough Fed monitoring and stress tests designed to assess whether firms can survive economic meltdowns. Since being created by the 2010 Dodd-Frank Act, the council has faced constant criticisms from financial firms and Republican lawmakers that it's opaque and that it gives government too much power over industry.
While big banks such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. automatically received the systemic-risk label, just two companies remain under Fed oversight that FSOC designated: insurers American International Group Inc. and Prudential Financial Inc. The people familiar with this week's meeting said industry representatives and Treasury officials discussed how FSOC could give up its authority to name companies, and instead flag certain business activities as risky.
'Thorough Review'
