Earlier this month, the Financial Stability Oversight Council finalized the standards it intends to use to determine which non-bank financial institutions would be deemed “systemically important.”
But even as FSOC moved to offer precise formulas and an exacting three-stage process for selecting which institutions will bear the “SIFI” label (exposing them to heightened prudential scrutiny by the Federal Reserve) the council’s final standards also provided the caveat that it reserved the right to slap the label on ANY firm that presented systemic risk, even if they don’t meet the criteria.
That bit of business is just one facet of the FSOC’s process that has continued to leave many industry groups perplexed. In this week’s edition of the FIRE Podcast, we talk to J. Stephen Zielezienski, senior vice president and general counsel of the American Insurance Association, about some of the concerns his group has had with FSOC’s non-bank SIFI rules, as well as questions the property and casualty industry continues to have about how systemic risk regulation (both in the United States and internationally) will actually work in practice.
Listen to the episode here, or subscribe to the FIRE Podcast in iTunes.