Designation of Global 'Too Big To Fail' Firms [October 29, 2015]   [open pdf - 94KB]

"Hearings in both the House and the Senate have examined the role and processes for U.S. financial regulators and the international standard-setting body--the Financial Stability Board (FSB)--for designating large financial institutions as systemically important (or 'too big to fail'). Members of Congress and various witnesses have raised concerns that the process of FSB designation for global firms, including U.S. firms, is opaque, and that it has potentially costly implications for large U.S. financial firms without affording them U.S. legal means of redress or U.S. 'due process.' This CRS [Congressional Research Service] Insight provides background on the FSB's designation process for systemically significant financial institutions, but takes no position on any potential benefits or shortcomings of that process. Background The FSB was established by G-20 nations in April 2009 to help strengthen the global financial system following the 2008 financial crisis. Its members comprise financial regulatory agencies of G-20 nations. The United States is represented at the FSB by the Department of the Treasury, the Federal Reserve Board, and the Securities and Exchange Commission. The FSB's functions include assessing vulnerabilities to the global financial system; coordinating with financial authorities of member nations; and recommending measures to protect and strengthen the global financial system. The FSB's recommendations and decisions are not legally binding on any of its member nations. Rather, the FSB 'operates by moral suasion and peer pressure, in order to set internationally agreed policies and minimum standards that its members commit to implementing at national level.'"

Report Number:
CRS Insight, IN10388
Public Domain
Retrieved From:
Federation of American Scientists: http://www.fas.org/sgp/crs/index.html
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