FSOC Finalizes Rule On Systemically Important Financial Institutions
The Financial Stability Oversight Council (FSOC) met earlier this afternoon and approved a process for designating non-bank financial institutions – such as insurers – as Systemically Important Financial Institutions (SIFIs) that had been proposed in October of last year. The final rule unanimously approved today was characterized as “very similar” to the October proposal. Those companies designated as SIFIs will be subjected to supervision by the Federal Reserve’s Board of Governors as well as enhanced prudential standards.
Since the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law there has been legitimate concern that some in our industry – which does not pose a systemic risk to the U.S. economy – would be swept into this new regulatory regime. The FSOC reaffirmed today that it will be approaching each designation on a firm-specific basis and not relying on overly broad criteria that might sweep companies in unnecessarily. The SIFI-designation process has three stages and will rely on both quantitative standards and qualitative judgments, including a $50 billion asset threshold.
NAMIC believes that the process the FSOC put in place today is unlikely to impact any in the property/casualty insurance industry, which demonstrates that those on the Council have heard our clear and sustained message that property/casualty insurance should not be the focus of any new regulatory regime designed to protect the U.S. economy from systemic risk. We are encouraged that the focus has not been on property/casualty insurers and we will continue to work with the FSOC to ensure that this remains the case.
Contact: Jimi Grande
Senior Vice President, Federal and Political Affairs