Summary of HR 3682: Financial Stability Oversight Council Improvement Act of 2025

Purpose and Intent

The Financial Stability Oversight Council Improvement Act of 2025 (HR 3682) aims to amend the Financial Stability Act of 2010. The primary objective is to enhance the decision-making process of the Financial Stability Oversight Council (FSOC) regarding the supervision of U.S. nonbank financial companies by the Federal Reserve. The bill mandates that the FSOC must first consult with the company in question and its primary financial regulator before designating it for supervision, ensuring that alternative regulatory actions are considered.

Key Provisions

• Consultation Requirement: Before voting to designate a U.S. nonbank financial company for Federal Reserve supervision, the FSOC must:

  • Consult with the company and its primary financial regulator.
  • Determine that alternative actions (such as heightened standards or a written mitigation plan) are impracticable or insufficient to mitigate risks to U.S. financial stability.

• Amendments to Existing Law: The bill modifies Section 113 of the Financial Stability Act of 2010, specifically:

  • Adds a new paragraph (3) to subsection (a) that outlines the consultation and determination process.
  • Updates references in subsection (f)(1) to reflect the new requirements.

Impact

• Affected Entities: The legislation primarily impacts U.S. nonbank financial companies that could be subject to Federal Reserve oversight. This includes firms that may pose systemic risks to the financial system.
• Regulatory Framework: By requiring a thorough assessment of alternatives before imposing Federal Reserve supervision, the bill aims to enhance transparency and reduce the potential for arbitrary regulatory actions.

Legislative Process and Timeline

• Introduced: June 3, 2025, by Representative Bill Foster (IL-11) with bipartisan support, including co-sponsor Representative Bill Huizenga (R-MI).
• Committee Actions:
  • The bill was reported (amended) by the Committee on Financial Services on November 4, 2025 (H. Rept. 119-364).
  • It was ordered to be reported on September 16, 2025, with a vote of 47 in favor and 4 against.
• Current Status: As of November 4, 2025, the bill has been placed on the Union Calendar, indicating it is ready for consideration by the full House of Representatives.

Conclusion

HR 3682 seeks to reform the FSOC's approach to designating nonbank financial companies for Federal Reserve supervision, promoting a more consultative and transparent process. By ensuring that alternative regulatory measures are considered, the bill aims to protect the financial stability of the United States while providing a fairer framework for nonbank financial entities.