I 

114TH CONGRESS 

1ST SESSION H. R. 4248 

To amend the Financial Stability Act to revise the reevaluation procedures 

with respect to determinations by the Financial Stability Oversight Council that a nonbank financial company shall be supervised by the Board 

of Governors and shall be subject to prudential standards. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 15, 2015 

Mr. WESTMORELAND (for himself and Mr. DAVID SCOTT of Georgia) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

To amend the Financial Stability Act to revise the reevaluation procedures with respect to determinations by the 

Financial Stability Oversight Council that a nonbank 

financial company shall be supervised by the Board of 

Governors and shall be subject to prudential standards. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘FSOC Designation Re5 view Act’’. 


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1 SEC. 2. REEVALUATION AND REAFFIRMATION. 

2 Section 113(d) of the Financial Stability Act of 2010 

3 (12 U.S.C. 5323(d)) is amended to read as follows: 

4 ‘‘(d) REEVALUATION AND REAFFIRMATION.— 

5 ‘‘(1) IN GENERAL.—The Council shall reevalu6 ate each determination made under subsections (a) 

7 and (b) with respect to a nonbank financial company 

8 supervised by the Board of Governors on— 

9 ‘‘(A) an annual basis; and 

10 ‘‘(B) upon the request of such company 

11 based upon the company’s representation that 

12 there has been a material change in the com13 pany’s operations or activities or a material 

14 change in regulatory or market conditions. 

15 ‘‘(2) REEVALUATION.—As part of the reevalua16 tion required by paragraph (1), the Council shall— 

17 ‘‘(A) provide the nonbank financial com18 pany with a confidential written analysis of the 

19 specific elements of the company’s exposures or 

20 activities that would be relevant to the Council’s 

21 reevaluation of the determination for such com22 pany; 

23 ‘‘(B) provide the nonbank financial com24 pany with an opportunity to submit written ma25 terials to the Council regarding the reevalua26 tion, including, as the company’s option, a plan 


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1 to obtain rescission of the determination or 

2 other materials relevant to the assessment de3 scribed under paragraph (3)(A); 

4 ‘‘(C) if the nonbank financial company 

5 submits a plan under subparagraph (B), con6 sider whether the plan, if implemented, would 

7 result in the nonbank financial company no 

8 longer meeting the criteria for a final deter9 mination under subsection (a) or (b); 

10 ‘‘(D) make a preliminary written decision 

11 regarding rescinding such determination; 

12 ‘‘(E) if the preliminary decision is not to 

13 rescind the determination, provide the nonbank 

14 financial company with— 

15 ‘‘(i) a copy of the preliminary deci16 sion, which shall include a confidential 

17 written analysis explaining with specificity 

18 whether and to what extent any plan sub19 mitted by the company under subpara20 graph (B) addresses the potential threat 

21 posed by the nonbank financial company to 

22 the financial stability of the United States; 

23 ‘‘(ii) an opportunity to meet with rep24 resentatives of the Council to discuss the 


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1 preliminary decision and analysis provided 

2 under clause (i); and 

3 ‘‘(iii) an opportunity to revise and re4 submit such plan or any other written ma5 terials, after discussions with representa6 tives of the Council; and 

7 ‘‘(F) upon the request of the nonbank fi8 nancial company, grant such company an oral 

9 hearing before the Council. 

10 ‘‘(3) VULNERABILITY TO FINANCIAL DIS11 TRESS.— 

12 ‘‘(A) IN GENERAL.—The written analysis 

13 required under paragraph (2)(A) shall include 

14 an assessment describing with particularity the 

15 vulnerability of the nonbank financial company 

16 to financial distress, including consideration of 

17 the company’s leverage, liquidity risk and matu18 rity mismatch, and existing regulatory scrutiny 

19 of the company. 

20 ‘‘(B) EFFECTIVE OF FAILURE TO INCLUDE

21 ASSESSMENT.—If the Council provides a writ22 ten analysis under paragraph (2)(A) that does 

23 not contain the assessment required under sub24 paragraph (A), any determination made under 


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1 subsection (a) or (b) with respect to such com2 pany shall be rescinded immediately. 

3 ‘‘(C) DEFINITIONS.—For purposes of this 

4 paragraph the terms ‘vulnerability to financial 

5 distress’, ‘leverage’, ‘liquidity risk and maturity 

6 mismatch’, and ‘existing regulatory scrutiny of 

7 the nonbank financial company’ shall have the 

8 same meaning as those terms are given, respec9 tively, under appendix A to part 1310 of title 

10 12, Code of Federal Regulations. 

11 ‘‘(4) REAFFIRMATION.— 

12 ‘‘(A) IN GENERAL.—Following a reevalua13 tion under paragraph (1), the Council shall vote 

14 whether to reaffirm the determination that the 

15 nonbank financial company shall be supervised 

16 by the Board of Governors and shall be subject 

17 to prudential standards, pursuant to subsection 

18 (a) or (b), as applicable. 

19 ‘‘(B) VOTE REQUIREMENT.—Any reaffir20 mation under subparagraph (A) shall require a 

vote of no fewer than 2 21 ⁄3 of the voting members 

22 then serving, including an affirmative vote by 

23 the Chairperson, finding that the company still 

24 meets the standards for designation under sub25 section (a) or (b), as applicable. Any such findVerDate Sep 11 2014 01:46 Dec 16, 2015 Jkt 059200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4248.IH H4248

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1 ing shall include a detailed explanation of the 

2 basis for the Council’s determination, including 

3 a confidential written analysis explaining with 

4 specificity whether and to what extent any plan 

5 submitted by the nonbank financial company 

6 pursuant to paragraph (2)(B) addresses the po7 tential threat posed by the company to the fi8 nancial stability of the United States. 

9 ‘‘(C) EFFECT OF FAILURE TO REAF10 FIRM.—If the Council votes under subpara11 graph (A) with respect to a nonbank financial 

12 company and does not reaffirm the designation, 

13 the determination made with respect to such 

14 company shall be rescinded immediately. 

15 ‘‘(5) VIEWS OF PRIMARY FINANCIAL REGU16 LATORY AGENCY.—In conducting a reevaluation 

17 under paragraph (1), the Council shall consult with 

18 the primary financial regulatory agency for the 

19 nonbank financial company, if any, and the primary 

20 financial regulatory agencies of the company’s prin21 cipal subsidiaries, if any, and the views of such 

22 agencies shall be given special consideration.’’. 


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1 SEC. 3. JUDICIAL REVIEW. 

2 Section 113(h) of the Financial Stability Act of 2010 

3 (12 U.S.C. 5323(h)) is amended by striking ‘‘subsection 

4 (d)(2)’’ and inserting ‘‘subsection (d)(4)’’. 

Æ 


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