---
kind: "section"
citation: "12 U.S.C. § 5323"
title: "12"
title_heading: "Banks and Banking"
number: "5323"
heading: "Authority to require supervision and regulation of certain nonbank financial companies"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/5323"
units:
  - "Chapter 53 — Wall Street Reform and Consumer Protection"
  - "Subchapter I — Financial Stability"
  - "Part A — Financial Stability Oversight Council"
---

# §5323. Authority to require supervision and regulation of certain nonbank financial companies

- (a) **U.S. nonbank financial companies supervised by the Board of Governors—**
  - (1) **Determination—** The [Council](/usc/12/5301.md?p=8), on a nondelegable basis and by a vote of not fewer than ⅔ of the voting members then serving, [including](/usc/12/5301.md?p=18-A) an affirmative vote by the [Chairperson](/usc/12/5311.md?p=a-2), may determine that a [U.S. nonbank financial company](/usc/12/5311.md?p=a-4-B) shall be supervised by the [Board of Governors](/usc/12/5301.md?p=3) and shall be subject to [prudential standards](/usc/12/5301.md?p=13), in accordance with this subchapter, if the [Council](/usc/12/5301.md?p=8) determines that material financial distress at the [U.S. nonbank financial company](/usc/12/5311.md?p=a-4-B), or the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities of the [U.S. nonbank financial company](/usc/12/5311.md?p=a-4-B), could pose a threat to the financial stability of the United States.
  - (2) **Considerations—** In making a determination under [paragraph (1)](#a-1), the [Council](/usc/12/5301.md?p=8) shall consider—
    - (A) the extent of the leverage of the [company](/usc/12/5381.md?p=a-5);
    - (B) the extent and nature of the off-balance-sheet exposures of the [company](/usc/12/5381.md?p=a-5);
    - (C) the extent and nature of the transactions and relationships of the [company](/usc/12/5381.md?p=a-5) with other [significant nonbank financial companies](/usc/12/5311.md?p=a-7) and [significant bank holding companies](/usc/12/5311.md?p=a-7);
    - (D) the importance of the [company](/usc/12/5381.md?p=a-5) as a source of [credit](/usc/12/5481.md?p=7) for households, businesses, and [State](/usc/12/5301.md?p=16) and local governments and as a source of liquidity for the United States financial system;
    - (E) the importance of the [company](/usc/12/5381.md?p=a-5) as a source of [credit](/usc/12/5481.md?p=7) for low-income, minority, or underserved communities, and the impact that the failure of such [company](/usc/12/5381.md?p=a-5) would have on the availability of [credit](/usc/12/5481.md?p=7) in such communities;
    - (F) the extent to which assets are managed rather than owned by the [company](/usc/12/5381.md?p=a-5), and the extent to which ownership of assets under management is diffuse;
    - (G) the nature, scope, size, scale, concentration, interconnectedness, and mix of the activities of the [company](/usc/12/5381.md?p=a-5);
    - (H) the degree to which the [company](/usc/12/5381.md?p=a-5) is already regulated by 1 or more [primary financial regulatory agencies](/usc/12/5301.md?p=12);
    - (I) the amount and nature of the financial assets of the [company](/usc/12/5381.md?p=a-5);
    - (J) the amount and types of the liabilities of the [company](/usc/12/5381.md?p=a-5), [including](/usc/12/5301.md?p=18-A) the degree of reliance on short-term funding; and
    - (K) any other risk-related factors that the [Council](/usc/12/5301.md?p=8) deems appropriate.
- (b) **Foreign nonbank financial companies supervised by the Board of Governors—**
  - (1) **Determination—** The [Council](/usc/12/5301.md?p=8), on a nondelegable basis and by a vote of not fewer than ⅔ of the voting members then serving, [including](/usc/12/5301.md?p=18-A) an affirmative vote by the [Chairperson](/usc/12/5311.md?p=a-2), may determine that a [foreign nonbank financial company](/usc/12/5311.md?p=a-4-A) shall be supervised by the [Board of Governors](/usc/12/5301.md?p=3) and shall be subject to [prudential standards](/usc/12/5301.md?p=13), in accordance with this subchapter, if the [Council](/usc/12/5301.md?p=8) determines that material financial distress at the [foreign nonbank financial company](/usc/12/5311.md?p=a-4-A), or the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities of the [foreign nonbank financial company](/usc/12/5311.md?p=a-4-A), could pose a threat to the financial stability of the United States.
  - (2) **Considerations—** In making a determination under [paragraph (1)](#b-1), the [Council](/usc/12/5301.md?p=8) shall consider—
    - (A) the extent of the leverage of the [company](/usc/12/5381.md?p=a-5);
    - (B) the extent and nature of the United States related off-balance-sheet exposures of the [company](/usc/12/5381.md?p=a-5);
    - (C) the extent and nature of the transactions and relationships of the [company](/usc/12/5381.md?p=a-5) with other [significant nonbank financial companies](/usc/12/5311.md?p=a-7) and [significant bank holding companies](/usc/12/5311.md?p=a-7);
    - (D) the importance of the [company](/usc/12/5381.md?p=a-5) as a source of [credit](/usc/12/5481.md?p=7) for United States households, businesses, and [State](/usc/12/5301.md?p=16) and local governments and as a source of liquidity for the United States financial system;
    - (E) the importance of the [company](/usc/12/5381.md?p=a-5) as a source of [credit](/usc/12/5481.md?p=7) for low-income, minority, or underserved communities in the United States, and the impact that the failure of such [company](/usc/12/5381.md?p=a-5) would have on the availability of [credit](/usc/12/5481.md?p=7) in such communities;
    - (F) the extent to which assets are managed rather than owned by the [company](/usc/12/5381.md?p=a-5) and the extent to which ownership of assets under management is diffuse;
    - (G) the nature, scope, size, scale, concentration, interconnectedness, and mix of the activities of the [company](/usc/12/5381.md?p=a-5);
    - (H) the extent to which the [company](/usc/12/5381.md?p=a-5) is subject to [prudential standards](/usc/12/5301.md?p=13) on a consolidated basis in its home country that are administered and enforced by a comparable foreign supervisory authority;
    - (I) the amount and nature of the United States financial assets of the [company](/usc/12/5381.md?p=a-5);
    - (J) the amount and nature of the liabilities of the [company](/usc/12/5381.md?p=a-5) used to [fund](/usc/12/5381.md?p=a-12) activities and operations in the United States, [including](/usc/12/5301.md?p=18-A) the degree of reliance on short-term funding; and
    - (K) any other risk-related factors that the [Council](/usc/12/5301.md?p=8) deems appropriate.
- (c) **Antievasion—**
  - (1) **Determinations—** In order to avoid evasion of this subchapter, the [Council](/usc/12/5301.md?p=8), on its own initiative or at the request of the [Board of Governors](/usc/12/5301.md?p=3), may determine, on a nondelegable basis and by a vote of not fewer than ⅔ of the voting members then serving, [including](/usc/12/5301.md?p=18-A) an affirmative vote by the [Chairperson](/usc/12/5311.md?p=a-2), that—
    - (A) material financial distress related to, or the nature, scope, size, scale, concentration, interconnectedness, or mix of, the financial activities conducted directly or indirectly by a [company](/usc/12/5381.md?p=a-5) incorporated or organized under the laws of the United States or any [State](/usc/12/5301.md?p=16) or the financial activities in the United States of a [company](/usc/12/5381.md?p=a-5) incorporated or organized in a country other than the United States would pose a threat to the financial stability of the United States, based on consideration of the factors in subsection [(a)(2)](#a-2) or [(b)(2)](#b-2), as applicable;
    - (B) the [company](/usc/12/5381.md?p=a-5) is organized or operates in such a manner as to evade the application of this subchapter; and
    - (C) such financial activities of the [company](/usc/12/5381.md?p=a-5) shall be supervised by the [Board of Governors](/usc/12/5301.md?p=3) and subject to [prudential standards](/usc/12/5301.md?p=13) in accordance with this subchapter, consistent with [paragraph (3)](#c-3).
  - (2) **Report—** Upon making a determination under [paragraph (1)](#c-1), the [Council](/usc/12/5301.md?p=8) shall submit a report to the appropriate committees of Congress detailing the reasons for making such determination.
  - (3) **Consolidated supervision of only financial activities; establishment of an intermediate holding company—**
    - (A) **Establishment of an intermediate holding company—** Upon a determination under [paragraph (1)](#c-1), the [company](/usc/12/5381.md?p=a-5) that is the subject of the determination may establish an intermediate holding [company](/usc/12/5381.md?p=a-5) in which the financial activities of such [company](/usc/12/5381.md?p=a-5) and its [subsidiaries](/usc/12/5301.md?p=18-A) shall be conducted (other than the activities described in [section 5367(b)(2) of this title](/usc/12/5367.md?p=b-2)) in compliance with any regulations or guidance provided by the [Board of Governors](/usc/12/5301.md?p=3). Such intermediate holding [company](/usc/12/5381.md?p=a-5) shall be subject to the supervision of the [Board of Governors](/usc/12/5301.md?p=3) and to [prudential standards](/usc/12/5301.md?p=13) under this subchapter as if the intermediate holding [company](/usc/12/5381.md?p=a-5) were a [nonbank financial company supervised by the Board of Governors](/usc/12/5311.md?p=a-4-D).
    - (B) **Action of the Board of Governors—** To facilitate the supervision of the financial activities subject to the determination in [paragraph (1)](#c-1), the [Board of Governors](/usc/12/5301.md?p=3) may require a [company](/usc/12/5381.md?p=a-5) to establish an intermediate holding [company](/usc/12/5381.md?p=a-5), as provided for in [section 5367 of this title](/usc/12/5367.md), which would be subject to the supervision of the [Board of Governors](/usc/12/5301.md?p=3) and to [prudential standards](/usc/12/5301.md?p=13) under this subchapter, as if the intermediate holding [company](/usc/12/5381.md?p=a-5) were a [nonbank financial company supervised by the Board of Governors](/usc/12/5311.md?p=a-4-D).
  - (4) **Notice and opportunity for hearing and final determination; judicial review—** Subsections [(d)](#d) through [(h)](#h) shall apply to determinations made by the [Council](/usc/12/5301.md?p=8) pursuant to [paragraph (1)](#c-1) in the same manner as such subsections apply to [nonbank financial companies](/usc/12/5311.md?p=a-4-C).
  - (5) **Covered financial activities—** For purposes of this subsection, the term “financial activities”—
    - (A) means activities that are financial in nature (as defined in [section 1843(k) of this title](/usc/12/1843.md?p=k));
    - (B) includes the ownership or [control](/usc/12/5301.md?p=18-A) of one or more [insured depository institutions](/usc/12/5301.md?p=18-A); and
    - (C) does not include internal financial activities conducted for the [company](/usc/12/5381.md?p=a-5) or any [affiliate](/usc/12/5301.md?p=1) thereof, [including](/usc/12/5301.md?p=18-A) internal treasury, investment, and employee benefit functions.
  - (6) **Only financial activities subject to prudential supervision—** Nonfinancial activities of the [company](/usc/12/5381.md?p=a-5) shall not be subject to supervision by the [Board of Governors](/usc/12/5301.md?p=3) and [prudential standards](/usc/12/5301.md?p=13) of the [Board](/usc/12/1861.md?p=b-3). For purposes of this Act, the financial activities that are the subject of the determination in [paragraph (1)](#c-1) shall be subject to the same requirements as a [nonbank financial company supervised by the Board of Governors](/usc/12/5311.md?p=a-4-D). Nothing in this paragraph shall prohibit or limit the authority of the [Board of Governors](/usc/12/5301.md?p=3) to apply [prudential standards](/usc/12/5301.md?p=13) under this subchapter to the financial activities that are subject to the determination in [paragraph (1)](#c-1).
- (d) **Reevaluation and rescission—** The [Council](/usc/12/5301.md?p=8) shall—
  - (1) not less frequently than annually, reevaluate each determination made under subsections [(a)](#a) and [(b)](#b) with respect to such [nonbank financial company supervised by the Board of Governors](/usc/12/5311.md?p=a-4-D); and
  - (2) rescind any such determination, if the [Council](/usc/12/5301.md?p=8), by a vote of not fewer than ⅔ of the voting members then serving, [including](/usc/12/5301.md?p=18-A) an affirmative vote by the [Chairperson](/usc/12/5311.md?p=a-2), determines that the [nonbank financial company](/usc/12/5311.md?p=a-4-C) no longer meets the standards under subsection [(a)](#a) or [(b)](#b), as applicable.
- (e) **Notice and opportunity for hearing and final determination—**
  - (1) **In general—** The [Council](/usc/12/5301.md?p=8) shall provide to a [nonbank financial company](/usc/12/5311.md?p=a-4-C) written notice of a proposed determination of the [Council](/usc/12/5301.md?p=8), [including](/usc/12/5301.md?p=18-A) an explanation of the basis of the proposed determination of the [Council](/usc/12/5301.md?p=8), that a [nonbank financial company](/usc/12/5311.md?p=a-4-C) shall be supervised by the [Board of Governors](/usc/12/5301.md?p=3) and shall be subject to [prudential standards](/usc/12/5301.md?p=13) in accordance with this subchapter.
  - (2) **Hearing—** Not later than 30 days after the date of receipt of any notice of a proposed determination under [paragraph (1)](#e-1), the [nonbank financial company](/usc/12/5311.md?p=a-4-C) may request, in writing, an opportunity for a written or oral hearing before the [Council](/usc/12/5301.md?p=8) to contest the proposed determination. Upon receipt of a timely request, the [Council](/usc/12/5301.md?p=8) shall fix a time (not later than 30 days after the date of receipt of the request) and place at which such [company](/usc/12/5381.md?p=a-5) may appear, personally or through counsel, to submit written materials (or, at the sole discretion of the [Council](/usc/12/5301.md?p=8), oral testimony and oral argument).
  - (3) **Final determination—** Not later than 60 days after the date of a hearing under [paragraph (2)](#e-2), the [Council](/usc/12/5301.md?p=8) shall notify the [nonbank financial company](/usc/12/5311.md?p=a-4-C) of the final determination of the [Council](/usc/12/5301.md?p=8), which shall contain a statement of the basis for the decision of the [Council](/usc/12/5301.md?p=8).
  - (4) **No hearing requested—** If a [nonbank financial company](/usc/12/5311.md?p=a-4-C) does not make a timely request for a hearing, the [Council](/usc/12/5301.md?p=8) shall notify the [nonbank financial company](/usc/12/5311.md?p=a-4-C), in writing, of the final determination of the [Council](/usc/12/5301.md?p=8) under subsection [(a)](#a) or [(b)](#b), as applicable, not later than 10 days after the date by which the [company](/usc/12/5381.md?p=a-5) may request a hearing under [paragraph (2)](#e-2).
- (f) **Emergency exception—**
  - (1) **In general—** The [Council](/usc/12/5301.md?p=8) may waive or modify the requirements of [subsection (e)](#e) with respect to a [nonbank financial company](/usc/12/5311.md?p=a-4-C), if the [Council](/usc/12/5301.md?p=8) determines, by a vote of not fewer than ⅔ of the voting members then serving, [including](/usc/12/5301.md?p=18-A) an affirmative vote by the [Chairperson](/usc/12/5311.md?p=a-2), that such waiver or modification is necessary or appropriate to prevent or mitigate threats posed by the [nonbank financial company](/usc/12/5311.md?p=a-4-C) to the financial stability of the United States.
  - (2) **Notice—** The [Council](/usc/12/5301.md?p=8) shall provide notice of a waiver or modification under this subsection to the [nonbank financial company](/usc/12/5311.md?p=a-4-C) concerned as soon as practicable, but not later than 24 hours after the waiver or modification is granted.
  - (3) **International coordination—** In making a determination under [paragraph (1)](#f-1), the [Council](/usc/12/5301.md?p=8) shall consult with the appropriate home country supervisor, if any, of the [foreign nonbank financial company](/usc/12/5311.md?p=a-4-A) that is being considered for such a determination.
  - (4) **Opportunity for hearing—** The [Council](/usc/12/5301.md?p=8) shall allow a [nonbank financial company](/usc/12/5311.md?p=a-4-C) to request, in writing, an opportunity for a written or oral hearing before the [Council](/usc/12/5301.md?p=8) to contest a waiver or modification under this subsection, not later than 10 days after the date of receipt of notice of the waiver or modification by the [company](/usc/12/5381.md?p=a-5). Upon receipt of a timely request, the [Council](/usc/12/5301.md?p=8) shall fix a time (not later than 15 days after the date of receipt of the request) and place at which the [nonbank financial company](/usc/12/5311.md?p=a-4-C) may appear, personally or through counsel, to submit written materials (or, at the sole discretion of the [Council](/usc/12/5301.md?p=8), oral testimony and oral argument).
  - (5) **Notice of final determination—** Not later than 30 days after the date of any hearing under [paragraph (4)](#f-4), the [Council](/usc/12/5301.md?p=8) shall notify the subject [nonbank financial company](/usc/12/5311.md?p=a-4-C) of the final determination of the [Council](/usc/12/5301.md?p=8) under this subsection, which shall contain a statement of the basis for the decision of the [Council](/usc/12/5301.md?p=8).
- (g) **Consultation—** The [Council](/usc/12/5301.md?p=8) shall consult with the [primary financial regulatory agency](/usc/12/5301.md?p=12), if any, for each [nonbank financial company](/usc/12/5311.md?p=a-4-C) or [subsidiary](/usc/12/5301.md?p=18-A) of a [nonbank financial company](/usc/12/5311.md?p=a-4-C) that is being considered for supervision by the [Board of Governors](/usc/12/5301.md?p=3) under this section before the [Council](/usc/12/5301.md?p=8) makes any final determination with respect to such [nonbank financial company](/usc/12/5311.md?p=a-4-C) under subsection [(a)](#a), [(b)](#b), or [(c)](#c).
- (h) **Judicial review—** If the [Council](/usc/12/5301.md?p=8) makes a final determination under this section with respect to a [nonbank financial company](/usc/12/5311.md?p=a-4-C), such [nonbank financial company](/usc/12/5311.md?p=a-4-C) may, not later than 30 days after the date of receipt of the notice of final determination under subsection [(d)(2)](#d-2), [(e)(3)](#e-3), or [(f)(5)](#f-5), bring an action in the United States district [court](/usc/12/5381.md?p=a-6) for the judicial district in which the home [office](/usc/12/5341.md?p=1) of such [nonbank financial company](/usc/12/5311.md?p=a-4-C) is located, or in the United States District [Court](/usc/12/5381.md?p=a-6) for the District of Columbia, for an order requiring that the final determination be rescinded, and the [court](/usc/12/5381.md?p=a-6) shall, upon review, dismiss such action or direct the final determination to be rescinded. Review of such an action shall be limited to whether the final determination made under this section was arbitrary and capricious.
- (i) **International coordination—** In exercising its duties under this subchapter with respect to [foreign nonbank financial companies](/usc/12/5311.md?p=a-4-A), foreign-based [bank holding companies](/usc/12/5301.md?p=18-A), and cross-border activities and markets, the [Council](/usc/12/5301.md?p=8) shall consult with appropriate foreign regulatory authorities, to the extent appropriate.

## Source credit

(Pub. L. 111–203, title I, § 113, July 21, 2010, 124 Stat. 1398.)

## Notes

### Editorial Notes

### References in Text

This subchapter, referred to in subsecs. (a)(1), (b)(1), (c)(1), (3), (6), (e)(1), and (i), was in the original “this title”, meaning title I of Pub. L. 111–203, July 21, 2010, 124 Stat. 1391, which is classified principally to this subchapter. For complete classification of title I to the Code, see Short Title note set out under section 5301 of this title and Tables.

This Act, referred to in subsec. (c)(6), is Pub. L. 111–203, July 21, 2010, 124 Stat. 1376, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, which enacted this chapter and chapters 108 (§ 8201 et seq.) and 109 (§ 8301 et seq.) of Title 15, Commerce and Trade, and enacted, amended, and repealed numerous other sections and notes in the Code. For complete classification of this Act to the Code, see Short Title note set out under section 5301 of this title and Tables.