MFA submitted a comment letter to the Financial Stability Oversight Council’s (FSOC) regarding the Proposed Risk Analytic Framework and Nonbank Designation Guidance Proposal. The letter highlights that the Proposed Guidance would undermine the strength and flexibility of U.S. financial markets and market participants.
MFA’s letter highlights that private funds do not pose a systemic risk and historically have been a source of stability for the markets during times of stress. Additionally, the letter stresses that the Proposed Guidance fails to provide transparency around how FSOC identifies and assesses risks to financial stability and when FSOC will use its designation authority. MFA argues, for these reasons, that FSOC designation is a blunt tool that would be inappropriate to apply to the private fund industry.
MFA recommends revisions to the Proposed Guidance to provide greater transparency, specificity, and guidance to market participants.