The Financial Stability Oversight Council (FSOC) has cleared the path for a vote on systemically important financial institutions (SIFI) by closing the book on the evidentiary record for a set of nonbank financial companies and sending a letter notifying them.
The vote could come as early as next week, but it would be up to the companies to disclose any action or results — FSOC nor the Treasury will divulge any company-specific labels or information until a final determination is made.
The Council approved the letter and the resolution completing its evidence-gathering work May 24, setting in motion a 180-day time period for it to vote on whether a company should be designated a SIFI or not.
If FSOC votes at its next meeting Monday, June 3, companies voted to be SIFIs would be given 30 days to respond and request a hearing. The ball is then in FSOC’s court for 30 days.
A final determination requires a vote of two-thirds of the FSOC. The vote to close the books on the evidentiary process was unanimous.
There is only one insurance expert as a voting member of FSOC, Roy Woodall. NAIC’s John Huff and Federal Insurance Office (FIO) Director Michael McRaith have weighed in and their staff involved in the process.
The nonbank companies that have made it to Stage 3 of the review process include insurers AIG and Prudential Insurance Co. of America, as both have previously aknowledged. GE Capital is also in the mix of nonbanks under consideration.
A vote can come any time between now and Thanksgiving, but Treasury Secretary Jacob Lew has made it clear in testimony to the Senate on May 21 that he wants the Dodd-Frank Act work done without delay, although there was no deadline for a vote on the first set of nonbank SIFIs until now, he said.
“I have actually stepped on the accelerator,” with regard to Dodd-Frank implementation, Lew said later on in the hearing. Lew said in testimony that finalizing Dodd-Frank work is a matter of “public trust.” He mentioned the FSOC meeting to be held next week, as well, in his testimony, without prompting.
The Treasury-led emphasis on timeliness and speed means that some companies might no longer be able to outrun a designation through months of politicking and policy persuasion.
Scot Hoffman, a spokesman for Prudential, declined comment.