On December 8, 2015, the Chairman of the FDIC, Martin J. Gruenberg, the Comptroller of the Currency, Thomas J. Curry and the Director of the Consumer Financial Protection Bureau, Richard Cordray, testified before the Committee on Financial Services in the US House of Representatives on the progress achieved by the US Financial Stability Oversight Council in fulfilling its mandate. Chairman Gruenberg, Comptroller Curry and Director Cordray discussed the actions taken by the FSOC toward (i) identifying risks to financial stability arising from entities designated as systemically important financial institutions; and (ii) identifying and addressing systemic risk in the US financial system. On the issue of SIFI designation, both Chairman Gruenberg and Comptroller Curry noted the FSOC’s final rule and guidance, setting forth the formal process used by the FSOC in making such a determination. Comptroller Curry further noted the final rule and interpretive guidance issued by the FSOC for identifying and designating systemically important financial market utilities.
On the issue of identifying and addressing systemic risk, Chairman Gruenberg referenced the FSOC Annual Reports, which provide the basis for analysis of potential emerging risks to US financial stability. Chairman Gruenberg discussed specific risks identified in the FSOC Annual Reports, including (i) potential interest rate risk which could result in problems related to maturity mismatch; (ii) increase in credit risk due to easing of lending standards and other forms of increased risk taking; and (iii) the increase in emerging threats and vulnerabilities due to cybersecurity breaches.
Chairman Gruenberg’s testimony is available at: https://www.fdic.gov/news/news/speeches/spdec0815.html?source=govdelivery&utm_medium=email&utm_source=govdelivery.
Comptroller Curry’s written testimony is available at: http://www.occ.gov/news-issuances/congressional-testimony/2015/pub-test-2015-156-written.pdf.
Director Cordray’s written testimony is available at: http://www.consumerfinance.gov/newsroom/written-testimony-of-cfpb-director-richard-cordray-before-the-house-financial-services-committee.