April 21, 2023

Senator Warren Applauds Regulators for Rescinding Trump Administration Guidance, Urges Council to Protect Financial System After Banking Crisis

Washington, D.C. – United States Senator Elizabeth Warren (D-Mass.) released the below statement on the Financial Stability Oversight Council (FSOC) issuing new guidance for designating nonbank financial companies for Federal Reserve supervision and enhanced prudential standards:

“Biden administration regulators have taken a powerfully important step to protect hardworking Americans by finally heeding my call to strengthen oversight of giant nonbank financial institutions. We saw in the 2008 crisis how financial institutions that aren’t banks – including insurance companies, mortgage issuers, and hedge funds – can be big enough and risky enough to crash our whole economy. The Trump administration put us all in danger by significantly weakening financial regulators’ oversight of these giant corporations, and now FSOC should follow through by using this tool to ensure the stability of our financial system.” 

Senator Warren led oversight work to hold the Trump administration accountable for undermining FSOC’s ability to designate nonbanks as systemically important financial institutions (SIFIs) and urged financial regulators to rescind this decision: 

  • In May 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren questioned Treasury Secretary Janet Yellen about the Trump administration’s actions to undermine FSOC’s ability to designate nonbanks as SIFIs. In response to Senator Warren's questions, Secretary Yellen agreed that FSOC’s oversight abilities needed to be strengthened again
  • In March 2021, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called for BlackRock, the world’s largest asset management firm, and other giant nonbank financial firms to be designated as SIFIs.
  • In October 2017, Senators Warren and Sheldon Whitehouse (D-R.I.)  raised serious concerns about FSOC’s decision to remove American Insurance Group's designation as a SIFI and the risks this poses to the financial system. 
  • In July 2017, Senators Warren and Whitehouse wrote to then-Treasury Secretary Steve Mnuchin in his role as the FSOC chair, requesting information on whether Carl Icahn communicated with any FSOC members as the council considers whether to reverse the designation of American Insurance Group as a SIFI. At the time, Icahn, who served as a special adviser to President Trump and maintained a large stake in AIG. 
  • In April 2016, Senator Warren and then-Representative Elijah Cummings (D-Md.) released a Government Accountability Office report documenting the dramatic growth of nonbank mortgage servicers and details the need for stronger regulatory oversight of the industry.