The Financial Stability Oversight Council (FSOC) recently voted to issue 12 CFR Part 1310 (Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies) and the Analytic Framework for Financial Stability Risk Identification, Assessment, and Response (Proposed Analytics Framework or PAF) for public comment. The Systemic Risk Council believes that non-bank financial institutions (NBFIs) and their activities represent a growing and unaddressed vulnerability to financial stability in the U.S. and beyond. We support the FSOC as it recalibrates the designation process and upgrades its capabilities to gather necessary data and improve its line-of-sight on nonbank leverage, interconnectedness, liquidity and risk management gaps. We believe that the measure of success for these Proposals will be a process that is calibrated for prompt, corrective action and where the Office of Financial Research will have appropriate resources for staffing, monitoring capabilities, and data analysis to implement the PAF.

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