Treasury Secretary Jacob Lew said today that the Financial Stability Oversight Council will vote “soon” on designating nonbanks, such as insurers, as systemically significant.
At the same time, the FSOC said in its annual report released today that the Federal Insurance Office and state insurance regulators “should continue to be vigilant” about interest rate risk.
The report identified interest rate risk at insurance companies as “one of a handful of serious vulnerabilities” about which the FSOC must maintain close scrutiny.
As the meeting got underway, Sen. John Tester, D-Mont., and Sen. Mike Johanns, R-Neb., chairman and ranking minority member of the Banking Securities, Insurance and Exchange Subcommittee of the Senate Banking Committee, said in a letter sent to Lew today asking for clarification from Treasury about its intent to make public analysis used to evaluate nonbank financial institutions for possible designation as SIFI. The letter encouraged the FSOC to differentiate among different industries and not just use bank metrics to evaluate nonbanks.
Securities analysts expect that AIG, General Electric, and Prudential, will comprise the first round of designations.
Washington Analysis said in an investor’s note this week that it expects MetLife to be designated shortly thereafter, possibly as early as the third quarter of this year.