The Financial Stability Oversight Council (FSOC) has released its 2016 Annual Report, which was unanimously approved by its voting members on Tuesday, June 21, 2016. The FSOC is required by Congress to report on their activities annually. The Dodd-Frank Act created the FSOC in order to properly identify risks that may pose challenges in the financial market and ultimately the financial stability of the United States as a whole.
Several key areas of the annual report include:
- Annual Report Recommendations (which includes 11 recommendations)
- Financial Developments
- Regulatory Developments and Council Activities
- Potential Emerging Threats and Vulnerabilities
One of the main focuses of the report is related to cybersecurity. Recently, there has been an influx of cyber threats for companies and governments within the U.S. and internationally. The Cybersecurity Act of 2015 will cement a new foundation that will be built upon for the future of protecting information sharing. Through the robust legal framework, companies will have the ability to share cyber-related information among themselves, and between the private and public sectors. The goal is to improve the ability to identify, analyze, and respond to any attacks that will impact any sector. In order to do so, the FSOC recommends that members continue to work together with law enforcement, homeland security, and legislators in order to implement the proper legislation.
Another important aspect of the report is on global economic and financial developments. It is evident in the past year that FSOC has concerns over the slow global growth. Much of this concern primarily stems from the recent global financial crisis. New development of emergent market economies (EMEs) pose several risks to U.S. firms and markets as the pace of global growth continues to add volatility in many U.S. markets including equity, bond, and currency. Moreover, concerns with the potential exit of Great Britain from the European Union and the ongoing political tension between Russia and Ukraine will also continue to cause uneasiness over the future of global growth and have a role in influencing the outcome of economic policies in Europe.
The FSOC will continue to provide in-depth analysis of the potential risks to the U.S. financial stability. Further, through the U.S. Securities and Exchange Commission (SEC), they will continue to propose several rules that may additionally strengthen financial stability. In the meantime, the FSOC will continue to work with stakeholders to fairly address financial stability, which includes the Federal Government’s appeal of a court ruling pertaining to the FSOC’s authority to designate certain nonbank financial companies as systematically important financial institutions (SIFI).
To view a copy of the report, please click here.