WASHINGTON BUREAU — The Financial Stability Oversight Council (FSOC) will re-propose a draft version of the principles it plans to use to determine whether nonbank financial companies are systemically significant, an FSOC official says.
Amias Gerety, a deputy assistant secretary in the U.S. Treasury Department's Office of the FSOC, discussed the FSOC's plans in a letter sent to Rep. Randy Neugebauer, R-Texas, chairman of the Oversight Subcommittee at the House Financial Services Committee.
The Dodd-Frank Wall Street Reform and Consumer Protection Act created FSOC to monitor trends, events and companies that could pose a threat to the U.S. financial system. FSOC is supposed to help federal regulators decide whether nonbank financial services companies affect the stability of other financial services companies enough to be designated as "systemically important financial institutions" (SIFIs) in need of extra federal supervision.
The Dodd-Frank Act lists 10 criteria for deciding whether companies are SIFIs. The FSOC released draft regulations for implementing the provisions in January; insurers have complained that the draft gives too few details about how the FSOC would apply the rules to insurers. The FSOC is working to give the public more information about the draft process and framework for SIFI designations and it intends to re-propose the rule and release guidance for public comment, Gerety says in the letter to Neugebauer.
The re-proposed rule will specify the procedures for designating nonbank financial companies SIFIs and the guidance will explain the FSOC's approach to evaluating nonbank financial companies for designation, Gerety says.
The guidance will describe the FSOC's view of the primary factors relevant to a designation "which may be adjusted over time to respond to emerging threats as financial markets and companies evolve," Gerety says.
