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Financial Stability Oversight Council (FSOC)

The Financial Stability Oversight Council (FSOC) is a U.S. government body established by the Dodd-Frank Act in 2010 to identify and address risks that threaten the stability of the U.S. financial system. The FSOC monitors market developments, designates systemically important financial institutions, and coordinates regulatory actions among federal and state agencies. Its goal is to prevent financial crises by enhancing oversight and ensuring that financial institutions do not pose undue risks to the broader economy.

Example

The FSOC identifies a large insurance company as systemically important, subjecting it to enhanced regulatory scrutiny to mitigate risks that could impact the entire financial system.

Key points

• Monitors and addresses systemic risks in the U.S. financial system.

• Coordinates regulatory actions among federal and state agencies.

• Identifies systemically important institutions to prevent financial crises.

Quick Answers to Curious Questions

By identifying and mitigating systemic risks, the FSOC helps prevent crises that could destabilize the financial system, ensuring robust oversight of critical institutions.

The FSOC can designate institutions as systemically important, subjecting them to stricter regulations and oversight to mitigate potential risks.

It provides a coordinated approach to monitoring and managing risks across the financial sector, helping to safeguard the economy from systemic shocks.