In the proposed risk analysis framework, the FSOC states that it is taking a "broader approach to identifying, evaluating, and addressing potential risks to U.S. Analytical Financial Stability Risk Framework If adopted, the proposal's framework and interpretive guidance would presumably result in an increase in the Federal Reserve's oversight of the activities of designated firms and, possibly, an expansion of the number of nonbank financial firms that could be designated by the FSOC compared to its previous efforts. The new framework and interpretative guidance would be a significant shift from the existing FSOC guidance on financial stability, representing an effort to address the previous, uncured deficiencies identified in the designation process, including the FSOC's failure to designate under section 113 four prominent nonbank financial firms. The second proposal would update interpretative guidance on the procedures for designating nonbank financial companies for Federal Reserve supervision and enhanced prudential standards.The first proposal would establish a new analytical framework under DFA ยง 112 to provide greater transparency to the public about how the FSOC identifies, assesses, and addresses potential risks to financial stability, regardless of whether the risk stems from activities or firms, and.The announcement signals a renewed effort by the FSOC in its approach to overseeing the safety and soundness of the U.S. On April 21, 2023, the Financial Stability Oversight Council ("FSOC") issued two important proposals regarding the designation of a nonbank financial firm as a systemically important financial institution ("nonbank SIFI") under Section 113 of the Dodd-Frank Act ("DFA").
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