The Financial Stability Oversight Council (FSOC) expects to vote on proposed designations of an initial set of nonbank financial companies in the near term, according to Treasury Secretary Jacob Lew in prepared testimony today before the Senate Banking Committee.
These companies, which include AIG, Prudential Insurance among insurers, if designated, would be subject to supervision by the Federal Reserve and enhanced prudential standards.
In questioning, Senate Banking Committee Chairman Tim Johnson, D-S.D., pointedly asked twice when the nonbank designations would be made.
Lew did not give a timetable for nonbank SIFIs but did say that it is a priority to getting the Dodd Frank work done expeditiously, and appeared to suggest several times he was making sure Dodd-Frank work started moving ahead at a faster pace.
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“My role is to make sure we don’t measure our progress in months and years but we measure in weeks and months,” Lew said.
He said he has made it clear that there is an enormous priority that “we complete the rules so everyone knows what the policy is,” and so that he public can be protected.
We must implement Dodd-Frank, and we must do it quickly, but we need to continue to look at the whole system, Lew said in testimony. Lew also made statements that appear to show flexibility on crafting rules that are more tailored to the institutions over a “one size fits all” regime.
“I think there will be progress this year,” Lew said. He noted there is an FSOC meeting the first week in June and while he has had three FSOC meetings so far in his three months as Treasury secretary, he has met on the issue in between these formal meetings.
Lew, who heads FSOC, said he was trying to get the nonbank SIFI matter up for a decision “as quickly as possible.”
“I have actually stepped on the accelerator,” with regard to Dodd-Frank implementation, Lew said later on in the hearing. He said this is important because finalizing Dodd-Frank work is a matter of “public trust.”
Lew added, though, that he does not have the ability to direct action with regard to other regulators on FSOC but said it was more a matter of moral situational influence he can have.