House passes bill to ramp up oversight of financial regulators

The House passed a bill Thursday that would put two financial regulators under tighter congressional oversight.

The bill would put the Financial Stability Oversight Council (FSOC) and the Treasury Department’s Office of Financial Research (OFR) under direct congressional appropriations, giving Congress the ability to dictate how much money each regulator gets. The regulators are currently funded by fees charged to major American financial firms.

Called the Financial Stability Council Reform Act, the bill passed along party lines 239-178 after clearing the House Financial Services Committee in November.

“FSOC typifies not only the shadow regulatory system but also the unfair Washington system that Americans have come to fear and loathe: powerful government administrators, secretive government meetings, arbitrary rules, and unchecked power to punish or reward,” committee Chairman Jeb Hensarling (R-Texas) said after the vote. “Thus, oversight and reform is paramount.”

Established in 2011, the FSOC is a panel of primarily federal agency heads asked to monitor risks in the domestic financial sector. The OFR was established to provide research, analysis and administrative support to the council.

The bill would also require the OFR to submit quarterly reports to Congress and allow the public 90 days to comment on proposed regulations.

Democrats panned the bill as a Republican lurch for control over agencies that should remain independent.

“Dodd-Frank specifically empowered both agencies with independent budgets – the same way our other banking regulators like the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation operate,” said Rep. Maxine Waters (Calif.), the committee’s top Democrat. “They were meant to be funded by the institutions they oversee and be shielded from Congressional politics.”