WASHINGTON (Reuters) - The U.S. risk panel said on Wednesday it was adopting reforms to shed more transparency on its process for deciding which large financial firms should be designated for additional oversight because they pose systemic market risks.
The Financial Stability Oversight Council said three reforms designed to help both companies and the general public understand the process would go into effect immediately. The panel added it may consider additional changes down the road.
The FSOC is a panel of regulators chaired by U.S. Treasury Secretary Jack Lew and is tasked with policing the market for emerging risks. It has the power to designate large financial firms as systemic, a tag that carries tougher capital rules and oversight by the Federal Reserve.
The FSOC first pledged it would improve transparency in the process last month, when staff launched a number of proposals at a public meeting of the council.
The FSOC's proposals came in the wake of criticism from the financial industry and the U.S. Congress accusing the FSOC of being too shrouded in secrecy.
The FSOC said on Wednesday that under its new reforms, companies will get more advanced notice on when they are being considered for designation so they can provide regulators with more input.
Companies will also get a greater opportunity to weigh in when the FSOC conducts its annual review into whether a company's designation should remain in place.
In addition, the FSOC pledged to provide the general public more details about how the designation process works.
"The changes adopted today represent an important step for the Council that will increase the transparency of our designations process and strengthen the Council overall," Lew said.
Since the FSOC was created by the 2010 Dodd-Frank law, it has designated American International Group, Prudential Financial, GE Capital and Metlife.
Metlife is currently challenging the FSOC's decision in a federal court.
Reporting by Sarah N. Lynch and Douwe Miedema; Editing by Sandra Maler