A U.S. Treasury official pushed back against criticism by some Republican lawmakers that the process for deciding whether financial companies pose a potential risk to stability lacks transparency.
The official, who requested anonymity as a condition for briefing reporters in Washington Monday, said the Financial Stability Oversight Council, which is headed the Treasury secretary, must balance transparency with the need to keep company data confidential.
A bill by Representative Scott Garrett, a New Jersey Republican, would allow members of Congress into the council’s meetings. Having too many people in the meetings could stifle discussion, the Treasury official said.
Treasury Secretary Jacob J. Lew will testify to a House committee Tuesday and a Senate panel June 25 about the activities of the council, which monitors potential risks to the financial system.
The FSOC is authorized by the 2010 Dodd-Frank law to designate non-bank financial companies as systemically important and subject them to Federal Reserve oversight.
American International Group Inc., Prudential Financial Inc. and General Electric Co.’s finance arm have been named, and MetLife Inc. has been in the final stage of the designation process for almost a year.
Under Dodd-Frank, bank-holding companies with more than $50 billion in assets are overseen by the Fed.
Voting along party lines, the House Financial Services Committee approved Garrett’s proposal along with one by Representative Randy Neugebauer of Texas.
Neugebauer’s bill imposes a one-year moratorium on FSOC systemic-risk designations. The bills would need Democratic support to pass the Senate.
As Treasury secretary, Lew is chairman of the council, whose 10 voting members also include the chairmen of the Fed, the Securities and Exchange Commission and the Federal Deposit Insurance Corp.
The Treasury official also said the SEC expects to complete new rules on money-market mutual funds this summer. The SEC has been under pressure from the Fed and global regulators to make money funds— which manage more than $2 trillion in savings by individuals and institutions—less vulnerable to investor runs.