Council of top financial regulators pledges to avoid secret deliberations unless necessary

Financial stability council pledges openness

WASHINGTON — The new council of top regulators charged with making the financial system safer is pledging to do as much of its work in the open as possible.

The Financial Stability Oversight Council held an organizational session Friday and adopted a “transparency policy.” That policy says the council will only close its meetings when the discussions involve market-sensitive or confidential supervisory information.

Treasury Secretary Timothy Geithner, the chairman of the group, said he believes the new guidelines provide a careful balance between the need to keep the public informed and the handling of market-sensitive information.

Shelia Bair, the head of the Federal Deposit Insurance Corp., said she believes “the more transparent that we can be with this group, the better” as it seeks to build public confidence.

The new policy stands in contrast to the secrecy that surrounded the group that the council replaces, the President’s Working Group on Financial Markets.

That group, which included many of the same regulatory agencies as the new council, was formed after the 1987 stock market crash. It would often meet during times of market turbulence over the past two decades, but those meetings were always closed.

The new council did hold a portion of its organizational session behind closed doors, but it held open votes on all of its actions, including adopting the by-laws under which the council will operate. Those rules and other information about the council were posted on the group’s website at www.treas.gov/fsoc.

The new oversight council, whose members include Federal Reserve Chairman Ben Bernanke, was created by the Dodd-Frank financial overhaul law passed in July. The council has the task of spotting and dealing with the types of systemic risks that threatened the financial system in 2008.

The financial overhaul law provides it with the power to monitor the financial system in a comprehensive way by involving all key federal regulators including the Treasury, the Federal Reserve, FDIC, Office of the Comptroller of the Currency, the Securities and Exchange Commission and selected state regulators.

Among the actions Friday, the council asked for public comments on what issues it should consider in selecting the non-bank financial institutions that will come under its regulatory oversight.

The council also asked for public comment on what issues should be covered by a study it will conduct to decide how to limit a banks’ own trading in such potentially risky investments as hedge funds.