From The Hill
One memorandum directs Mnuchin to asses the Financial Stability
Oversight Council’s (FSOC) process of designating banks and financial
firms “too big to fail.” FSOC, a multi-agency group established in
Dodd-Frank, monitors financial risks and designates certain banks and
financial firms “systemically important financial institutions” (SIFIs).
That label subjects banks to tougher federal oversight, and Republicans
claim the designation is applied inconsistently and arbitrarily.
The
other memorandum would direct Mnuchin to review and report back on
whether the federal government's orderly liquidation authority (OLA) is
useful or hurtful to the U.S economy, and in line with administration
financial regulatory policy.
Established in Dodd-Frank,
OLA is the process through which the federal government would help SIFIs
sell off their assets without triggering an economic crisis. Though OLA
is funded through fees paid by large banks and financial firms,
Republicans call it a "bailout" for big banks and seek to replace it
with a new bankruptcy process. Democrats typically support OLA as a
safeguard against another financial crisis.
Trump's orders come as House Republicans prepare major legislative overhauls
to Dodd-Frank. The House Financial Services Committee is scheduled to
hold a hearing on April 26 to consider Chairman Jeb Hensarling’s
(R-Texas) sweeping rewrite of the post-recession financial regulation.
