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Congress Asks For Greater FSOC Transparency

On April 9, 2014, a bi-partisan group of 41 members of Congress wrote FSOC Chairman Jacob Lew, asking for greater transparency in the FSOC’s evaluation of the asset management industry.  The letter criticizes the report written by Treasury’s Office of Financial Research (OFR), which purported to analyze the potential systemic risks of the asset management industry.  As we reported earlier, members of the House Committee on Oversight and Governmental Reform had reviewed documents relevant to the creation of the OFR report and found that the OFR had rejected SEC staff objections to drafts of the report as well as offers to correct misstatements in the draft document.  The April 9 letter criticizes the conclusions contained in the OFR report, and asks that any further review of the asset management industry take place “in an open and transparent manner.”  The letter asks that the FSOC “precisely identify the systemic risks it is trying to address,” and “explain in detail how any identified risks would be mitigated” by subjecting asset management firms to supervision by the Federal Reserve.  The letter also requests that any additional regulatory review or action “not limit access to these services or cause them to become cost-prohibitive.”