Oversight of the Financial Stability Oversight Council: Due Process and Transparency in Non-Bank SIFI Designations

Abstract

This is testimony given by the author before the House Committee on Financial Services on 19 November 2015 in connection with MetLife v. Financial Stability Oversight Council (FSOC). The author argues that the FSOC's SIFI-designation process represents a textbook case of a familiar finance-regulatory strategy, long upheld by our courts, aimed at dutifully discharging necessary Congressional delegation on the one hand while comporting with separation of powers and due process values on the other hand. He also argues that FSOC represents a quintessentially American, pragmatic solution to the long-festering 'silo' problem in American financial regulation, and that its designations of systemically important financial institutions (SIFIs), decided as they are by all of the nation's principal financial regulators, are entitled to great deference on grounds of (a) well-settled doctrine under Chevron, (b) the highly technical character of the problem with which FSOC deals, and (c) the exceptionally high stakes of failure adequately to monitor large, complex financial institutions.