FSOC Minutes: A Step Forward, But More Disclosure Needed

The Bipartisan Policy Center’s (BPC) Financial Regulatory Reform Initiative (FRRI) commends the Financial Stability Oversight Council (FSOC) for enhancing the quality of its minutes released yesterday, and encourages it to take further steps to increase transparency. BPC has previously called on FSOC to enhance the quality of its minutes and these actions are a significant first step toward meeting that goal.

At its May 7 open meeting, the FSOC committed to “conducting its business in an open and transparent manner.” Specifically, it stated that it would “open its meetings to the public whenever possible.” This echoed a key recommendation contained in the FRRI’s recent report, Dodd-Frank’s Missed Opportunity: A Road Map for a More Effective Regulatory Architecture, which called on the FSOC to use more open forums to discuss FSOC business in greater detail. The FRRI believes that this pledge, together with the FSOC’s commitment to release the minutes of meetings on a regular basis following their next regularly scheduled meeting, are steps in the right direction.

Yesterday, the FSOC released the minutes from its May 7 meeting. We welcome the increased detail in this document, but encourage the FSOC to continue to make the minutes more detailed. While the FSOC clearly cannot release all the sensitive financial information that it discusses, it can and should release significantly more detail about its conversations. This would follow the precedent set by the Federal Reserve’s Federal Open Markets Committee (FOMC), which releases detailed minutes three weeks after each meeting. For many years, there was a debate about whether the Federal Reserve could increase its transparency while also discussing market sensitive information. The Federal Reserve was able to do just that, enhancing its transparency while also preserving its integrity and increasing the flow of information to the market, investors, and the general public.

Given the Federal Reserve’s success in boosting transparency, the FRRI believes that the FSOC can and should follow a similar model. By doing so, it will help to strengthen the FSOC’s legitimacy and help it better accomplish its critical mission of identifying and responding to threats to the financial system. Yesterday’s release of minutes was a positive step in that direction. More detail on the conversation that occurs at the closed door portion of FSOC will be an important metric of progress.