Filed Under:Life Insurance, Life Practice Management

Treasury: Government near the end of SIFI process

FSOC chair and Treasury Secretary Jacob Lew (AP file photo)
FSOC chair and Treasury Secretary Jacob Lew (AP file photo)

The top Treasury overseer of financial institutions said Thursday night that the government “is nearing the end of the process” of designating which nonbanks, such as insurers, will be deemed systemically significant and therefore subject to federal regulation.

However, the comments by Mary Miller, U.S. Treasury undersecretary for Domestic Finance, are not that much different than comments on the issue she made at a Washington conference March 4 regarding the time of SIFI designations for nonbanks, so it is unclear how soon that the agency will vote on designating an insurer as a SIFI.

At that time, Miller said the “hope is that the FSOC will vote up or down on the SIFI designations “in the next few months.”

In her latest comments at the annual Hyman P. Minsky financial conference at Barnard College in New York, Miller said that the Financial Stability Oversight Council “is in the final stages of evaluating an initial set of nonbank financial companies to determine which companies will be supervised by the Federal Reserve Board and subject to prudential standards including capital and liquidity requirements. For the first set of companies, the Council is nearing the end of the process.”

The FSOC is chaired by Treasury Secretary Jacob Lew. Industry analysts and comments by the companies indicate that the insurance companies most likely to be designated in the first go around are AIG and Prudential Financial.

MetLife officials are campaigning fiercely in an effort to escape such designation, and have not confirmed that it made it to the so-called third stage of that process.

The SIFI designation will subject the companies it applies to enhanced prudential standards and supervision by the Federal Reserve. Asset management businesses that make up a large part of some insurers may at some point come under these standards and other insurers may have to reckon with financial oversight in the future.

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