Financial Stability Oversight Council Improvement Act of 2014

To amend the Financial Stability Act of 2010 to improve the transparency of the Financial Stability Oversight Council, to improve the SIFI designation process, and for other purposes. 1. Short title This Act may be cited as the Financial Stability Oversight Council Improvement Act of 2014 2. Transparency and accountability Section 111 of the Financial Stability Act of 2010 ( 12 U.S.C. 5321 (k) Application of the Administrative Procedure Act (1) In general The Council shall be an agency for purposes of subchapter II of chapter 5 and chapter 7 Administrative Procedure Act (2) Notice of meetings by Chairperson The Chairperson shall be responsible for the public announcements required under section 552b(e) of title 5, United States Code. (3) Closed meeting votes A determination made by the Council under section 552b(c) (4) Treatment as regulators of financial institutions The Council and the Office of Financial Research shall each be an agency responsible for the regulation or supervision of financial institutions for purposes of section 552(b)(8) (l) Publication of reports and analyses (1) In general With respect to any final report, study, or analysis prepared by the Council, the Council shall promptly make available to the public, after distribution for review or use— (A) any data, analysis, and reports— (i) produced by the Council; and (ii) produced by member agencies or the Office of Financial Research to support the work of the Council; and (B) with respect to any findings in such report, study, or analysis, an explanation for such findings and any data used to substantiate such findings. (2) Redaction of exempt information Paragraph (1) shall not apply to any information that is exempt from disclosure under section 552(b) of title 5, United States Code. (m) Revisions to analytic framework for determinations The Council shall make no revisions to any final published analytic framework for determinations under this section or adopt or apply any new similar framework without providing prior public notice and an opportunity for comment, consistent with section 553 . 3. SIFI designation process Section 113 of the Financial Stability Act of 2010 ( 12 U.S.C. 5323 (1) in subsection (a)(2)— (A) in subparagraph (J), by striking and (B) by redesignating subparagraph (K) as subparagraph (L); and (C) by inserting after subparagraph (J) the following: (K) the appropriateness of the imposition of prudential standards as opposed to other forms of regulation to mitigate the identified risks; and ; (2) in subsection (b)(2)— (A) in subparagraph (J), by striking and (B) by redesignating subparagraph (K) as subparagraph (L); (C) by inserting after subparagraph (J) the following: (K) the appropriateness of the imposition of prudential standards as opposed to other forms of regulation to mitigate the identified risks; and ; and (D) in subsection (d)— (i) in paragraph (1), by striking and (ii) by redesignating paragraph (2) as paragraph (3); and (iii) by inserting after paragraph (1) the following: (2) provide written notice to the nonbank financial company being reevaluated and afford such company an opportunity to submit written materials, within such time as the Council determines to be appropriate (but which shall be not less than 30 days after the date of receipt by the company of such notice), to contest the determination, including materials concerning whether, in the company’s view, material financial distress at the company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities of the company could pose a threat to the financial stability of the United States; and ; (3) by amending subsection (e) to read as follows: (e) Requirements prior to a final determination, notice and opportunity for hearing, and final determination (1) Notice of identification for initial evaluation and opportunity for voluntary submission Upon identifying a nonbank financial company for comprehensive analysis of the potential for the nonbank company to pose a threat to the financial stability of the United States, the Council shall provide the nonbank financial company with— (A) written notice that explains with specificity the basis for so identifying the company; and (B) an opportunity to submit written materials for consideration by the Council as part of the Council’s initial evaluation of the risk profile and characteristics of the company. (2) Requirements before making a proposed determination Before making a proposed determination with respect to a nonbank financial company under paragraph (3), the Council shall— (A) by a vote of not fewer than 2/3 (B) with respect to nonbank financial company with a primary financial regulatory agency, provide a copy of the resolution described under subparagraph (A) to the primary financial regulatory agency and provide such agency with at least 180 days from the receipt of the resolution to— (i) consider the risks identified in the resolution; and (ii) issue proposed regulations or undertake other regulatory action to mitigate or prevent the identified risks; and (C) provide the nonbank financial company with— (i) written notice that the Council is considering whether to make a proposed determination with respect to the nonbank financial company under subsection (a) or (b), as applicable; (ii) an opportunity to submit written materials, within such time as the Council deems appropriate (but not less than 30 days after the date of receipt by the company of the notice described under clause (i)), to the Council to inform the Council’s consideration of the nonbank financial company for a proposed determination, including materials concerning the company’s views as to whether it satisfies the standard for determination set forth in subsection (a) or (b), as applicable; and (iii) written notice when the Council deems its evidentiary record regarding such nonbank financial company to be complete. (3) Proposed determination (A) Voting The Council may, by a vote of not fewer than 2/3 (B) Deadline for making a proposed determination With respect to a nonbank financial company provided with a written notice under paragraph (2)(C)(i), if the Council does not provide the company with the written notice of a proposed determination described under paragraph (4) within the 180-day period following the date on which the Council notifies the company under paragraph (2)(C) that the evidentiary record is complete, the Council may not make such a proposed determination with respect to such company unless the Council repeats the procedures described under paragraph (2). (C) Review of actions of primary financial regulatory agency With respect to a nonbank financial company with a primary financial regulatory agency, the Council may not vote under subparagraph (A) to make a proposed determination unless— (i) the Council determines that any proposed regulations or other regulatory actions taken by the primary financial regulatory agency after receipt of the resolution described under paragraph (2)(A) are insufficient to mitigate or prevent the risks identified in the resolution; (ii) the primary financial regulatory agency has notified the Council that the agency has no proposed regulations or other regulatory actions to mitigate or prevent the risks identified in the resolution; or (iii) the period allowed by the Council under paragraph (2)(B) has elapsed and the primary financial regulatory agency has taken no action in response to the resolution. (4) Notice of proposed determination The Council shall provide to a nonbank financial company written notice of a proposed determination of the Council, including an explanation of the basis of the proposed determination of the Council, that a nonbank financial company shall be supervised by the Board of Governors and shall be subject to prudential standards in accordance with this title, an explanation of the specific risks to the financial stability of the United States presented by the nonbank financial company, and a detailed explanation of why other regulatory action by the company’s primary financial regulatory agency, if any, is insufficient to mitigate or prevent such risk. (5) Hearing (A) In general Not later than 30 days after the date of receipt of any notice of a proposed determination under paragraph (4), the nonbank financial company may request, in writing, an opportunity for a written or oral hearing before the Council to contest the proposed determination, including the opportunity to present a plan to modify the company’s business, structure, or operations in order to mitigate the risks identified in the notice, and which plan shall also include any steps the company expects to take during the implementation period to mitigate such risks. (B) Grant of hearing Upon receipt of a timely request, the Council shall fix a time (not earlier than 30 days after the date of receipt of the request) and place at which such company may appear, personally or through counsel, to— (i) submit written materials (which may include a plan to modify the company’s business, structure, or operations); or (ii) provide oral testimony and oral argument. (6) Council consideration of company plan (A) In general If a nonbank financial company submits a plan in accordance with paragraph (5), the Council shall, prior to making a final determination— (i) consider whether the plan, if implemented, would mitigate the risks identified in the notice under paragraph (4); and (ii) provide the nonbank financial company an opportunity to revise the plan after consultation with the Council. (B) Voting Approval by the Council of a plan submitted under paragraph (5) or revised under subparagraph (A)(ii) shall require a vote of not fewer than 2/3 (C) Implementation of approved plan With respect to a nonbank financial company’s plan approved by the Council under subparagraph (B), the company shall have one year to implement the plan, except that the Council, in its sole discretion and upon request from the nonbank financial company, may grant one or more extensions of the implementation period. (D) Oversight of implementation (i) Periodic reports The Council, acting through the Office of Financial Research, may require the submission of periodic reports from a nonbank financial company for the purpose of evaluating the company’s progress in implementing a plan approved by the Council under subparagraph (B). (ii) Inspections The Council may direct the primary financial regulatory agency of a nonbank financial company (or, if none, the Board of Governors) to inspect the company for the purpose of evaluating the company’s progress in implementing the company’s plan. (E) Authority to rescind approval (i) In general During the implementation period described under subparagraph (C), including any extensions granted by the Council, the Council shall retain the authority to rescind its approval of the plan if the Council finds, by a vote of not fewer than 2/3 (ii) Final determination vote The Council may proceed to a vote on final determination under subsection (a) or (b), as applicable, not earlier than 10 days after providing the nonbank financial company with written notice that the Council has rescinded the approval of the company’s plan pursuant to clause (i). (F) Actions after implementation (i) Evaluation of implementation After the end of the implementation period described under subparagraph (C), including any extensions granted by the Council, the Council shall consider whether the plan, as implemented by the nonbank financial company, adequately mitigates or prevents the risks identified in the resolution described under paragraph (2)(A). (ii) Voting If, after performing an evaluation under clause (i), not fewer than 2/3 (7) Final council decisions (A) In general Not later than 90 days after the date of a hearing under paragraph (5), the Council shall notify the nonbank financial company of— (i) a final determination under subsection (a) or (b), as applicable; (ii) the Council’s approval of a plan submitted by the nonbank financial company under paragraph (5) or revised under paragraph (6); or (iii) the Council’s decision to take no further action with respect to the nonbank financial company. (B) Explanatory statement A final determination of the Council, under subsection (a) or (b), shall contain a statement of the basis for the decision of the Council, including the reasons why the Council rejected any plan by the nonbank financial company submitted under paragraph (5) or revised under paragraph (6). ; and (4) by adding at the end the following: (j) Periodic review of individual determination (1) Review Every 5 years after the date of a final determination with respect to a nonbank financial company under subsection (a) or (b), as applicable, the nonbank financial company may submit a written request to the Council for a reevaluation of such determination. Upon receipt of such a request, the Council shall conduct a reevaluation of such determination and hold a vote on whether to rescind such determination. (2) Procedures (A) In general Upon receipt of a written request under paragraph (1), the Council shall fix a time (not earlier than 30 days after the date of receipt of the request) and place at which such company may appear, personally or through counsel, to— (i) submit written materials (which may include a plan to modify the company’s business, structure, or operations, which shall specify the length of the implementation period); or (ii) provide oral testimony and oral argument before the members of the Council. (B) Treatment of plan If the company submits a plan in accordance with subparagraph (A)(i), the Council shall consider whether the plan, if implemented, would cause the company to no longer meet the standards for a final determination under subsection (a) or (b), as applicable. The Council shall provide the nonbank financial company an opportunity to revise the plan after consultation with the Council. (3) Rescission of determination (A) In general If the Council, by a vote of not fewer than 2/3 (B) Approval of company plan Approval by the Council of a plan submitted or revised in accordance with paragraph (2) shall require a vote of not fewer than 2/3 (k) Periodic assessment of the impact of designations (1) Assessment Every five years after the date of enactment of this section, the Council shall— (A) conduct a study of the Council’s determinations that nonbank financial companies shall be supervised by the Board of Governors and shall be subject to prudential standards; and (B) comprehensively assess the impact of such determinations on the companies for which such determinations were made and the wider economy, including whether such determinations are having the intended result of improving the financial stability of the United States. (2) Report Not later than 90 days after completing a study required under paragraph (1), the Council shall issue a report to the Congress that— (A) describes all findings and conclusions made by the Council in carrying out such study; and (B) identifies whether any of the Council’s determinations should be rescinded or whether related regulations or regulatory guidance should be modified, streamlined, expanded, or repealed. . 4. Rule of construction None of the amendments made by this Act may be construed as limiting the Financial Stability Oversight Counsel’s emergency powers under section 113(f) of the Financial Stability Act of 2010 ( 12 U.S.C. 5323(f)

Summary: Financial Stability Oversight Council Improvement Act of 2014 - Amends the Financial Stability Act of 2010 to subject the Financial Stability Oversight Council (Council) to the Administrative Procedure Act. Requires the Council to make publicly available any final report study or analysis it has prepared, unless exempt from disclosure. Requires the Council, when determining whether to subject a U.S. or a foreign nonbank financial company to supervision by the Board of Governors of the Federal Reserve System and to prudential standards, to consider the appropriateness of imposing such standards as opposed to other forms of regulation to mitigate identified risks to U.S. financial stability. Requires the Council, when reevaluating determinations with respect to a nonbank financial company under Federal Reserve Board supervision, to provide written notice to the company and afford it opportunity to submit written materials to contest the determination. Directs the Council, upon identifying a nonbank financial company for comprehensive analysis of its potential to pose a threat to U.S. financial stability, to provide: (1) written notice that explains with specificity the basis for the identification, and (2) an opportunity to submit written materials for Council consideration. Prescribes procedural requirements for proposed determinations and final decisionmaking by the Council, including periodic review of individual determinations. Directs the Council every five years to study: (1) the impact of its determinations to subject nonbank financial companies to Federal Reserve Board supervision and prudential standards, and (2) whether such determinations have the intended result of improving domestic financial stability.