WASHINGTON—The Financial Stability Oversight Council will re-propose on Tuesday the guidelines it will use in determining that a non-bank such as an insurer is SIFI (a “systemically important financial institution”) and will therefore be subject to federal as well as state regulation.
The much-criticized proposal will be re-introduced when the FSOC will hold its first meeting with insurance expert Roy Woodall as a voting member and that the first item on the agenda will be, “Second notice of proposed rulemaking and guidance on the authority to require supervision and regulation of certain nonbank financial companies.”
And, in comments today before the Senate Banking Committee on the FSOC, Treasury Secretary Geithner said that, next week’s meeting will attempt to “give clarity” to the markets on how they designate SIFIs by adopting a framework.
He did not specify whether that meant that the FSOC will be asked to approve the re-proposal of the rule and guidance governing designation of non-banks as “SIFI.”
It is believed that the meeting was scheduled, and the SiFi issue put on the agenda, in anticipation that Geithner would receive questions on the SiFi issue regarding nonbanks as he testifies on the FSOC before both the Senate banking panel and the House Financial Services Committee.
In comments on the issue, Blain Rethmeier, a spokesman for the American Insurance Assocation, said, “AIA will be tracking this meeting very closely. The rulemaking as it applies to nonbank financials is of primary interest to our association and having Mr. Woodall on the panel should add a new dynamic.”
Robert DeFillippo, chief communications office for Prudential, said in response to the FSOC announcement that Prudential “continues to be supportive of regulation that makes sense.” He said Prudential has been working with federal regulators to provide information on the insurance industry and the company, and looks forward to examining what the FSOC proposes.
Whit Cornman, a spokesman for the American Council of Life Insurers said that, “We understand that Treasury plans to re-propose the rules for designating non-bank financial entities as systemically important financial institutions. We look forward to reviewing a re-proposal once it has been issued and submitting comments as appropriate. We hope that any re-proposal provides greater clarity to the process for designating non-bank financial entities as SIFI.”
Jimi Grande, senior vice president for federal and political affairs for the National Association of Mutual Insurance Companies, said that, “NAMIC has argued since the financial crisis began that property/casualty insurance does not pose a systemic risk to the broader economy.”