Systemic Risk Council Comments on “JOBS Act 3.0” Bill

WASHINGTON, D.C.—On October 3, 2018, the Systemic Risk Council (SRC) sent a comment letter to Senators Michael Crapo and Sherrod Brown regarding the “JOBS Act 3.0” bill, S. 488, which has passed in the House of Representatives and may be taken up by the Senate Committee on Banking, Housing, and Urban Affairs.

The letter specifically focuses on the legislation’s proposals regarding (i) resolution planning, or “living will,” submissions and (ii) company-run stress testing. The proposal on living wills would prohibit the Federal Reserve and the Federal Deposit Insurance Corporation from requiring bank holding companies to submit resolution plans with a greater frequency than once every two years. The proposal on stress testing would exempt certain entities regulated by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), respectively, from the Dodd-Frank Act’s company-run stress testing requirement. Although this section includes a provision permitting the SEC and the CFTC to issue regulations requiring firms to conduct their own periodic analyses of their financial condition under adverse economic conditions, it does not oblige the agencies to require such analyses.

As the SRC has pointed out previously,[1] whenever the next recession comes, the adverse effects on borrowers and the financial system are likely to be worse than we are used to because the monetary policy arsenal is depleted and the scope for timely fiscal stimulus is likely constrained.  Congress therefore should be careful not to make amendments that dilute or remove safeguards against systemic risk that are currently in place.  Financial markets are not so polite that distress will hit the United States on a pre-determined statutory timetable or in a pre-specified sector. Accordingly, the SRC’s strong recommendation is that these sections of the JOBS Act 3.0 legislation should be dropped or amended in order to ensure that the financial services regulators have the capacity to respond adequately and promptly to systemic threats.

Read the full letter here

[1] The Systemic Risk Council, Statement to the Finance Ministers, Governors, Chief Financial Regulators, and Legislative Committee Leaders of the G20 Countries (Feb. 27, 2017), available at