U.S. Senators Mike Rounds (R-S.D.) and Gary Peters (D-Mich.) have introduced the FSOC Improvement Act, a bill designed to increase transparency and accountability in the Financial Stability Oversight Council (FSOC). The proposed legislation aims to improve how financial institutions are designated as systemically important financial institutions (SIFI).
The bill would codify 2019 guidance requiring FSOC to first assess whether systemic risks can be addressed by means other than SIFI designation. It would also mandate consultations with both the primary regulator and the affected company to explore alternative solutions before designating an institution as systemically important.
Senator Rounds stated, “I believe the FSOC Improvement Act is a crucial step towards enhancing the effectiveness and transparency of our financial regulatory system. 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.”
Senator Peters commented on the legislative effort: “I fought tooth-and-nail to pass Dodd Frank to hold financial institutions accountable and prevent another economic catastrophe that devastated countless Michiganders. 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 brought forward this legislation in 2018 during the 115th Congress. In the House, Representatives Bill Foster (D-Ill.) and Bill Huizenga (R-Mich.) are leading companion efforts; their version passed out of committee on September 16, 2025.
The FSOC Improvement Act has gained support from several industry groups, including major insurance associations, investment organizations, mortgage bankers, reinsurance representatives, and business advocacy groups.
Mike Flood, Senior Vice President at U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness said, “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.”
Jimi Grande from NAMIC remarked, “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.”
Bill Killmer from MBA said: “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.”
Bryan Corbett from MFA added: “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.”
David Chavern from ACLI stated: “The FSOC Improvement Act brings meaningful changes for consumers by strengthening financial stability with transparency and predictability, while also preserving healthy competition… 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.”
Tom Quaadman from ICI concluded: “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… 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.”
For more details about this bill’s text or progress visit official congressional sources.