(Corrects duplicate reference to spokeswoman for Treasury, who
also handles media inquiries for FSOC)
By Sarah N. Lynch
WASHINGTON, July 9 A U.S. congressman is
questioning whether the New York Federal Reserve bank is
exerting undue influence during closed-door meetings of an
oversight council tasked with identifying risks posed by large
In a letter to New York Fed President William Dudley on
Wednesday, New Jersey Republican Rep. Scott Garrett demanded the
bank hand over all documents and research reports that it has
provided to the Financial Stability Oversight Council concerning
the process of declaring that a firm poses a systemic risk.
The council of regulators created by the 2010 Dodd-Frank
Wall Street reform law is tasked with policing for emerging
systemic market risks.
The FSOC is chaired by Treasury Secretary Jack Lew, and
comprised of the heads of each major U.S. financial regulator,
including Federal Reserve Chair Janet Yellen and Securities and
Exchange Commission Chair Mary Jo White.
The council can to vote to designate large financial firms
as "systemic" - a tag that imposes more regulations and
oversight by the Fed.
FSOC has declared as systemic GE Capital, a unit of General
Electric, Prudential Financial and American
International Group, and is now said to be closely
scrutinizing the activities of large asset managers.
Although the New York Fed has been tapped as the designated
regulator for insurer AIG, it is the chair of the Federal
Reserve, and not the head of the New York bank, that is a member
of the FSOC by law.
Republican lawmakers and some SEC commissioners have accused
the FSOC of being too secretive in its decision-making and
restrictive about who can attend closed-door meetings.
FSOC members are allowed to bring one staffer to closed-door
meetings but they can bring more if they want to.
Garrett and SEC Republican Commissioner Mike Piwowar,
neither of whom are considered FSOC members under law, have
requested to attend closed FSOC meetings and were rejected.
Critics have pounced on the New York Fed because FSOC
closed-door minute meetings show that Dudley has been allowed to
participate in some private FSOC sessions. While he takes part
in closed-door meetings, Dudley does not get a vote on the
At times, meeting minutes have shown the Fed has had three
representatives at the table, between the chair, Fed Governor
Daniel Tarullo and Dudley.
"I have repeatedly expressed my concerns regarding FSOC's
lack of transparency and due process in the ... designation
process," Garrett wrote. "I am troubled that a non-member of
FSOC may be significantly influencing designation decisions."
Garrett has given the New York Fed until July 25 to respond.
He also previously introduced legislation that would permit
certain lawmakers and other regulators, such as SEC
commissioners, to attend private FSOC meetings.
Spokeswomen for the New York Fed and the U.S. Treasury
Department declined to comment.
(Reporting by Sarah N. Lynch; Editing by Phil Berlowitz)