Washington, D.C. — Federal Housing Finance Agency (FHFA) Acting Director Joseph Otting today issued the following statement supporting the Financial Stability Oversight Council’s (FSOC) decision to propose an activities-based approach for identifying potential market-wide risks and to amend the process for designating nonbank financial companies systemically important.  

“I support the proposal to revise the nonbanks interpretive guidance, which is consistent with the recommendations in the November 2017 U.S. Treasury Report.  

This proposal to shift FSOC’s focus away from individual company designations in favor of an activities-based approach is an acknowledgment that Section 113 designation authority is only one of many tools provided to FSOC.  Prioritizing an activities-based approach will enable FSOC to minimize competitive distortions resulting from its actions while more broadly addressing potential threats to U.S. financial stability. Relying more directly on the authority of existing primary regulators to address identified risks ensures that those with the most expertise on a given issue will be directly involved in the remediation of potential threats to U.S. financial stability. Consultation and coordination among regulators are the most valuable aspects of FSOC.

I would like to thank the staff at each of the FSOC member agencies for their hard work in preparing the revised guidance for nonbank financial company designations.  I look forward to gathering feedback from the public on this issue and working closely with FSOC to finalize this guidance.”