Sen. Sherrod Brown is pressing federal regulators to outline potential obstacles to their efforts to oversee so-called “shadow banks.”
The top Democrat on the Banking Committee on Monday asked the super-group of financial regulators to describe which congressional or court developments could threaten their ability to identify and regulate non-bank financial firms that could threaten the economy if they failed.
The letter comes a month after the group, the Financial Stability Oversight Council, had its decision to label MetLife a “systemically important” firm reversed by a federal court. As a result, MetLife will avoid being regulated as if it were a big bank.
In a letter sent to the regulators who make up the council, the Ohio senator wrote that he is “concerned that recent legislative efforts and legal developments could jeopardize our ability to address these risks in the future, leaving our economy vulnerable to another financial crisis.”
He asked the regulators to lay out any potential threats to their efforts and to state what additional powers might help them.
Created by the 2010 Dodd-Frank financial reform law, the council has the authority to name any company a threat to the system and set it up for stricter regulation.
Although Brown did not refer to any specific legislation, Republicans have introduced legislation to amend the council’s operations in ways that the law’s defenders have said would limit its ability to address potential threats to the financial system.
