Trump Prevents FSOC Designations and Bank Liquidations
In a Presidential Memorandum, President Trump directed the Secretary of the Treasury, as a member of the Financial Stability Oversight Council, not to cast a nonemergency vote to subject nonbank financial companies to enhanced regulation or to designate any financial market utilities as systematically important for a period of 180 days. The Presidential Memorandum also directs the Secretary of Treasury to undertake a thorough review of the related FSOC determination and designation processes under the Dodd-Frank Act and to report to the President.
In a separate Presidential Memorandum, President Trump directed the Secretary of Treasury not to exercise powers under the Dodd-Frank Act to place a financial company in receivership and initiate liquidation because it is in default or in danger of default and its failure and resolution would have serious adverse effects on financial stability in the United States, among other considerations for a period of 180 days. The Presidential Memorandum also directs the Secretary of Treasury to review and report to the President on the so-called orderly liquidation authority, including whether a new chapter in the U.S. Bankruptcy Code, in which the claims against a failed financial company would be resolved pursuant to the procedures of bankruptcy law rather than the provisions of the Dodd-Frank Act, would be a superior method of resolution for financial companies.
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