The 2010 financial stability act, introduced two new bodies which would scrutinize systematic risk, research the state of financial system and clarify the complete supervision of the bank holding companies by Federal Reserve. These agencies are Financial Stability Oversight Council and Office of Financial Research. The council has three main important tasks. They are:
To identify the potential risks that can affect monetary steadiness of United States. This includes both monetary and non-financial organizations.
They need to eliminate the expectations of the people from the government that it would support them in case they incur losses. This would promote market discipline.
They need to respond to the financial threats prevailing in the system.
The appointed council also has to perform certain duties which are as follows:
The Council has to better the integrity, stability, competitiveness and efficiency of the US markets.
This body has to promote market discipline
The council also needs to maintain the confidence of the investors.
The major task of the appointed council is to collect data from the various affiliated agencies, collate them and identify potential risks which can affect the US markets and are threat to financial stability (Tarullo, 2012). The council also has to monitor the local as well as international regulatory procedures and advise the Congress on the same.
The council has various authorities. It has the right to collect all kinds of information from the federal financial regulatory agency and can also ask the Office of financial research to accumulate data from the bank holding companies and non-bank financial companies. It also monitors local as well as international regulatory proposals and in order to make the US market competitive and safe from the potential risks.