In the News

Don’t Put SIFI Designations on the Back Burner

Author Gregg Gelzinis discusses a potentially concerning shift in regulating systemic risk ahead of an FSOC meeting with Treasury Secretary Steven Mnuchin.

Authors

  • Gregg Gelzinis

In a November report, the Treasury Department issued two primary recommendations for how the Financial Stability Oversight Council should exercise its authority to subject systemically important nonbanks to enhanced oversight. If followed, they would mark a deeply concerning shift in the FSOC’s approach to its role as a systemic risk regulator.

First, the report recommends that the council consider the likelihood of a firm’s failure when deciding whether to designate it as a “systemically important financial institution,” or SIFI, and thus subjected to enhanced regulation and oversight by the Federal Reserve. But if the FSOC waits until a systemically important nonbank is likely to experience material distress, it’s too late.

The above excerpt was originally published in American Banker. Click here to view the full article.

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Authors

Gregg Gelzinis

Associate Director