Amending the $50 billion consolidated assets threshold used as an evaluation criteria for nonbank financial institutions
The Department of the Treasury released its report on the Financial Stability Oversight Council (FSOC) and its processes for designating nonbank financial companies and financial market utilities (FMUs) as systemically important financial institutions (SIFIs). Treasury encourages the FSOC to prioritize the identification of particular financial activities or products that could pose risks to U.S. financial stability and then work with the primary financial regulatory agencies to use their existing authorities to address and mitigate these risks. Company-specific designations should be considered once it is determined that the risk to financial stability cannot be otherwise addressed.
In addition,Treasury suggests several other changes to the designations processes.
Treasury’s recommendations to the FSOC’s SIFI designation process, including the $50 billion consolidated assets threshold for nonbank financial institutions, can be primarily implemented by the FSOC and the regulatory agencies directly rather than through legislation. Notably, Treasury’s recommendations to change the process mark a clear break from earlier proposals to eliminate that authority altogether.