U.S. to unveil criteria for picking "systemic" firms
By Dave Clarke
WASHINGTON (Reuters) - Regulators Tuesday are set to give nervous insurance companies, mutual funds and other big players in financial markets a better idea of whether they will be tapped for the same type of additional government scrutiny facing large U.S. banks.
None of these industries are eager to be on the receiving end of the added attention that comes with being named "systemic" and have spent the past year lobbying to be ignored.
The concern is that new scrutiny will mean new restrictions that could hit firms' bottom lines.
Tuesday the Financial Stability Oversight Council is scheduled to release a new proposal on how it will determine which non-bank firms are important enough to the financial system that they merit greater oversight by the Federal Reserve.
Also Tuesday, banking regulators are scheduled to vote on a proposal banning most proprietary trading done by banks, known as the Volcker rule.
Both rules are highly anticipated parts of the 2010 Dodd-Frank financial oversight law.
Companies that are tapped for greater Fed supervision will be designated systemically important financial institutions (SIFIs), and will be subject to new capital and liquidity rules.
They will also be required to draft detailed plans on how they could be broken up if the company falters and is seized by the government. Continued...