Regulators to revisit criteria for ‘systemically important’ firms

Federal regulators on Monday said they are considering changes to the criteria for designating a firm as crucial for the financial system.

{mosads}Congress created the Financial Stability Oversight Council (FSOC) after the 2008 financial crisis and charged it with labeling companies “systematically important financial institutions” (SIFIs) if their collapse could threaten the economy.

“We take the responsibility of considering companies for potential designation very seriously,” said Treasury Secretary Jack Lew, who chairs the FSOC, at Monday’s meeting. “The Council will begin to consider possible changes in the coming months.”

Institutions that receive the SIFI designation face more stringent regulations from the Federal Reserve.

Regulators say the tougher regulations will help prevent taxpayer bailouts. They’ve also assigned SIFI-designation to non-banks, including insurance companies like Prudential Inc. and American International Group (AIG).

Insurance companies have pushed back, arguing they shouldn’t be subjected to regulations originally intended for banks.

MetLife officials announced Friday they’re appealing their SIFI designation, according to The Wall Street Journal.

Lew said at the meeting that members of the council — which include Federal Reserve Chairwoman Janet Yellen and Securities and Exchange Commission Chairwoman Mary Jo White — had voted to schedule a hearing for a company appealing FSOC’s SIFI-designation. He did not say which company.

Prudential executives lost their appeal to the FSOC about their SIFI-designation.

— This story was updated at 5:50 p.m.