WASHINGTON, DC -- Today, after the multi-regulator Financial Stability Oversight Council (FSOC) -- a group of the top U.S. financial regulators led by the U.S. Treasury Department -- finalized a framework on financial stability risks and nonbank financial company oversight, U.S. Senator Jack Reed (D-RI), a senior member of the Banking Committee, and U.S. Senator Sherrod Brown (D-OH), Chairman of the Senate Banking Committee, who led a joint letter encouraging FSOC to adopt the guidance, issued the following joint statement:

“FSOC’s new guidance is a prudent, balanced, and necessary step toward protecting the U.S. economy and ensuring adequate oversight of shadow banks like private equity and hedge funds. 

“It is a forward-looking effort to rein in unregulated financial giants before their overleveraged, interconnected activities threaten the economy with a repeat of the 2008 financial collapse.  Remember, many of these entities have benefited from trillions of dollars in bailouts in the wake of that collapse and the pandemic.  Shadow banks need stronger oversight and regulation. 

“Today’s guidance wisely corrects Trump-era changes that weakened FSOC oversight and rolled back protections which left taxpayers with the bill for Wall Street’s excess. This new guidance will revitalize FSOC’s powerful tools for policing shadow banks.

“It will also bring more transparency to FSOC’s regulatory approach.  Both the public and the financial sector will benefit from the rigorous and transparent regulatory process that FSOC will use.

“We applaud Secretary Yellen and the Council for their work today to protect our economy from shadow bank risks.”