Rounds Leads Legislation to Increase Transparency and Accountability for Financial Regulators

WASHINGTON - U.S. Senators Mike Rounds (R-S.D.), a member of the Senate Committee on Banking, Housing, and Urban Affairs, and Gary Peters (D-Mich.) introduced legislation to increase transparency and accountability within the Financial Stability Oversight Council (FSOC). The FSOC Improvement Act would enhance transparency and procedural fairness of the systemically important financial institutions (SIFI) designation process.

Specifically, this legislation would codify 2019 guidance that requires FSOC to determine whether systemic risks could be better addressed through means other than designating a financial institution as a SIFI. It would also require them to consult with the primary regulator and the company on other means to address potential threats to financial stability.

"I believe the FSOC Improvement Act is a crucial step towards enhancing the effectiveness and transparency of our financial regulatory system," said Rounds. "SIFI designation is a blunt tool that comes with a significant increase in regulatory burden for individual companies. By allowing an affected institution to modify its business, structure or operations prior to the SIFI designation, we are creating a more resilient financial environment for the American people, fostering economic growth and stability."

"I fought tooth-and-nail to pass Dodd Frank to hold financial institutions accountable and prevent another economic catastrophe that devastated countless Michiganders," said Peters. "This commonsense bill would build on that landmark law nearly two decades later by granting the Financial Stability Oversight Council the authority to better tailor regulatory oversight of certain financial institutions without compromising its core mission of maintaining the stability of the U.S. financial system. Doing so will ensure that our nation's financial institutions can continue to meet the needs of all communities."

Rounds first introduced the FSOC Improvement Act in 2018 during the 115th Congress. Representatives Bill Foster (D-Ill.) and Bill Huizenga (R-Mich.) lead the House companion, which passed out of the Financial Services Committee on September 16, 2025 by a vote of 47-4.

The FSOC Improvement Act is supported by the American Council of Life Insurers, APCIA, the Investment Company Institute, Managed Funds Association (MFA), Mortgage Bankers Association (MBA), National Association of Mutual Insurance Companies (NAMIC), Reinsurance Association of America, and the U.S. Chamber of Commerce.

"The Chamber commends Senator Mike Rounds and Senator Gary Peters for sponsoring the FSOC Improvement Act, which will bring much needed stability and predictability to the Financial Stability Oversight Council's authority regarding nonbank financial companies. This legislation ensures that the designation of a nonbank financial company as a Systemically Important Financial Institution by FSOC would be a tool of last resort, instilling a commonsense reform that will protect American financial stability and support a competitive system that benefits the entire economy," said Mike Flood, Senior Vice President, U.S. Chamber of Commerce, Center for Capital Markets Competitiveness.

"The National Association of Mutual Insurance Companies commends Senator Rounds for his continued leadership to protect the state-based system of insurance regulation. This legislation makes a needed change to the Financial Stability Oversight Council's (FSOC) guidance by incorporating state insurance regulators as part of the process. By making this change, it affirms the primacy of state insurance regulation, which is a tried-and-true system that focuses on what is best for consumers. State regulators know their states, communities, laws, and markets best," said Jimi Grande, Senior Vice President - Federal & Political Affairs, NAMIC

"The Mortgage Bankers Association and its members support this important bill because it brings needed stability to FSOC's approach to systemic risk and would ensure predictability and transparency governing the designation of nonbanks without the risk of reducing consumers' access to mortgage credit.," said Bill Killmer, Senior Vice President, Legislative & Political Affairs, MBA.

"MFA supports the Senate's introduction of commonsense, bipartisan legislation to bring transparency and accountability to the FSOC designation process. The bill will require FSOC to first consider targeted regulatory alternatives to address activities creating potential stability risk before turning to misguided and potentially damaging designations. This much-needed clarity will strengthen market stability and reduce uncertainty for investors, including pensions, foundations, and endowments." said Bryan Corbett, MFA President and CEO

"The FSOC Improvement Act brings meaningful changes for consumers by strengthening financial stability with transparency and predictability, while also preserving healthy competition," said American Council of Life Insurers President and CEO David Chavern. "It does this with clear guardrails around the designation process-establishing an activities-based approach, requiring real consultation with primary regulators, and making SIFI designation a tool of last resort."

"ICI applauds Senators Rounds and Peters for introducing this significant legislation to bring more accountability and transparency to FSOC. The Financial Stability Oversight Council Improvement Act will allow American businesses to operate free from the fear of draconian governmental overreach. As ICI has previously demonstrated, SIFI designation for fund managers would entail sweeping negative consequences and should only ever be used where proven necessary by robust data and cost-benefit analysis. ICI encourages the Senate to pass this legislation and bring more transparency to government, as well as greater certainty to investment funds and the millions of investors they serve," said Tom Quaadman, ICI Chief Government Affairs and Public Policy Officer.

Click HERE for full bill text.

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