S. 3578Senate119th Congress (2025-2027)In Committee

Financial Stability Oversight Council Improvement Act of 2025

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Updated January 24, 2026 at 3:51 AM UTC

The Financial Stability Oversight Council Improvement Act of 2025 changes the Financial Stability Act of 2010 so that the FSOC must explore alternative regulatory approaches before deciding to put a U.S. nonbank financial company under the Federal Reserve’s supervision. It requires the Council to consult with the company and its primary regulator and to confirm that other measures would be ineffective or insufficient, thereby affecting nonbank financial firms and the agencies that oversee them.

Key Provisions

Adds a new step (paragraph 3) requiring the Financial Stability Oversight Council (FSOC) to first determine, after consulting with the nonbank financial company and its primary regulator, that no other action—such as applying new or stricter standards, safeguards, or a company‑submitted remediation plan—would adequately address the potential threat to U.S. financial stability before voting to place the company under Federal Reserve supervision.
Updates the reference in subsection (f)(1) to point to the new paragraph (a)(3) and existing subsection (e) instead of the old subsection (e).

Legislative Activity

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SenateIntro Referral Latest Action

Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

Banking, Housing, and Urban Affairs Committee

December 18, 2025

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SenateIntro Referral

Introduced in Senate

December 18, 2025

SenateIntro Referral

Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

Banking, Housing, and Urban Affairs Committee

December 18, 2025

Bill Text

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Introduced in SenateIssued December 18, 2025

119th CONGRESS

1st Session

S. 3578

IN THE SENATE OF THE UNITED STATES

December 18, 2025

Mr. Rounds (for himself and Mr. Peters) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To amend the Financial Stability Act of 2010 to require the Financial Stability Oversight Council to consider alternative approaches before determining that a U.S. nonbank financial company shall be supervised by the Board of Governors of the Federal Reserve System, and for other purposes.

Short title

This Act may be cited as the Financial Stability Oversight Council Improvement Act of 2025.

Financial Stability Oversight Council

Section 113 of the Financial Stability Act of 2010 (12 U.S.C. 5323) is amended—

(1)

in subsection (a)—

(A)

in paragraph (1), by striking The Council and inserting Subject to paragraph (3), the Council; and

(B)

by adding at the end the following:

(3)

Initial determination

The Council may not vote on a proposed determination with respect to a U.S. nonbank financial company under paragraph (1) unless the Council first determines, in consultation with the company and the primary financial regulatory agency with respect to the company, that a different action by the Council or the agency (including the application of new or heightened standards and safeguards under section 120), or by the company under a written plan that is submitted promptly to the Council, is impracticable or insufficient to mitigate the threat that the company could pose to the financial stability of the United States.

; and

(2)

in subsection (f)(1), by striking subsection (e) and inserting subsections (a)(3) and (e).