#Systemic Risk: Congress and FSOC discussions

Financial Stability Oversight Council - http://www.treasury.gov/fsoc

(Reuters) - A U.S. government watchdog on Wednesday slammed a post-crisis regulatory council created to spot emerging financial market risks, saying the group operates with little transparency and does not have all the tools to do its job.

In testimony to Congress, the Government Accountability Office (GAO) faulted the Financial Stability Oversight Council (FSOC) for failing to enact certain reforms that were recommended in a report issued two years ago.

"FSOC still lacks a comprehensive, systematic approach to identify emerging threats to financial stability," said GAO staffer A. Nicole Clowers, in testimony before a U.S. House of Representatives financial services panel.

"FSOC has taken steps to improve its communication with the public, but could do more to improve transparency and accountability," Clowers said, noting that the council still does not keep detailed transcripts of its closed-door meetings.

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FSOC is supervising the whole financial industry including insurance companies (e.g. MetLife was deemed systemically important by FSOC in September) and more recently asset managers.

(Bloomberg) The FSOC had said in July it would focus on asset managers’ activities and products, moving away from designating the firms systemically important. The regulators had previously discussed whether asset companies such as BlackRock Inc. and Fidelity Investments should be designated.

The council, which has 10 voting members and is led by Treasury Secretary Jacob J. Lew, doesn’t release the names of companies unless a designation is made. The Treasury said in the statement that the vote “was unanimous with one member voting present.”

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