The Financial Stability Oversight Council ("FSOC") was briefed on: (i) the work of the Alternative Reference Rates Committee ("ARRC") by Jerome Powell of the Federal Reserve, and (ii) asset management products and activities by Jonah Crane from Treasury. In addition, the FSOC unanimously approved revisions to regulations under the Freedom of Information Act ("FOIA"), pursuant to the FOIA Improvement Act of 2016.
Delta Strategy Group provided a summary of the open session. Highlights include:
- The ARRC is working to: (i) identify one or more alternatives rates; (ii) develop a plan to implement the selected rate; and (iii) make a recommendation on an alternative to LIBOR sometime next year.
- Staff from the FSOC hedge fund working group described the risks that hedge funds may pose to the financial system, including the disruption caused by forced selling and transferring of risk to counterparties. The group made several recommendations to improve data collection and sharing among agencies, including the collection of bilateral repo data.
- Several council members agreed that the FSOC needs to continue to collect additional data to study and monitor hedge fund activities.
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