During a hearing on oversight of the Financial Stability Oversight Council, Republicans on the House Financial Services Committee called for transparency and singled out regulators on non-bank Systemically Important Financial Institution designations of insurance companies.
In a call for transparency, committee Chairman Jeb Hensarling (R-Texas) in his opening statement called the FSOC a shadow regulatory system that holds secretive government meetings, applies arbitrary rules and has unchecked power to punish or reward.
"Thus, oversight and reform is paramount," he said.
In a chastising opening statement, Rep. Scott Garrett (R-N.J.) scolded the eight members of FSOC in attendance, saying that they constantly ignore letters from the committee and should take note of the cameras around the room as they document all that the committee does.
"We are the elected officials," he added. "This is what we do."
A number of questions regarding how the council designated non-bank SIFIs were aimed at NCUA Chairman Debbie Matz and S. Roy Woodall, Jr., independent member with insurance expertise on FSOC.
Hensarling questioned Matz on the process behind which she voted to determine MetLife as a non-bank SIFI.
Matz replied that the council's decision was based on financial activities of MetLife. She said it was not one factor that helped determine the decision, but it was a collection of the insurer's derivatives, security lending and the difficulty that it would take to resolve those issues.
Several representatives questioned why Woodall's recommendation that MetLife not be designated a SIFI was ignored by other members of FSOC. Hensarling asked for a show of hands as to who on the council had private insurance industry experience. SEC Chairman Mary Jo White and Woodall raised their hands.
Hensarling then asked who had regulatory experience in the insurance industry.
Woodall was the solo hand in the air.
Still, Hensarling was not alone in his recognition of Woodall as the insurance expert on the council. Rep. Sean Duffy (R-Wis.) also criticized the council when he pointed out that the one panel witness with insurance expertise opposed MetLife's SIFI designation.
Rep. Al Green (D-Texas) compared the need for expertise to that of jurors on a trial case. He called into question Republican queries about the lack of expertise by other members on the panel voting in opposition to Woodall.
"Based on what's been said, only people with insurance expertise should vote on this," Green said. He asked Woodall if a judge or jury on any other types of cases would be invalid due to their lack of expertise.
Green often raised his voice in the exchange and talked over Woodall as he tried to answer Green's questions. He added that Woodall had not recused himself on the subject of banking on the panel.
Woodall did try to smooth over the conversation, saying that other members of the council were learning about insurance matters.
Rep. Mick Mulvaney (R-S.C.) disagreed with Green's analogy of jurors needing expertise. "That's not really the standard for members of this group. I don't want people walking out of here thinking there's no need for expertise," he said.
Mulvaney turned his attention to Matz, questioning how she was briefed on the MetLife case. Matz answered that she was briefed by her staff, as well as from the council and additional materials.
He then questioned the chairman as to why the review into derivatives was so important.
Since the case is still pending, Matz said, "We can't discuss the details of the deliberation."
"I don't like that answer," Mulvaney responded.
Additionally, Hensarling questioned the council's potential for having a negative impact on the stability of the economy. He urged the council to hold a mirror to itself when ascertaining what the emerging threats are to the financial stability of the economy.
FSOC "refuses to identify the obvious source of this apparent risk: The Fed's unprecedented loose monetary policy," he said.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
