The FSOC SIFI Designation Proposal for Nonbank Financial Companies

December 2011

Overview

A key objective of the Dodd-Frank Act is to subject Systemically Important Financial Institutions (SIFIs) to enhanced prudential standards to limit any impact their distress may have on financial stability. Congress determined that any bank holding company with $50 billion or more in assets would be a SIFI, as would any foreign bank with U.S. banking operations that has worldwide assets of $50 billion or more. However, in the case of nonbank financial companies (NBFCs), Congress left the question of which NBFCs should be designated SIFIs to the Financial Stability Oversight Council (FSOC). Recently, the FSOC proposed guidance on the process and the factors that it will use to designate NBFCs as SIFIs.

In this A Closer Look, we review and analyze this latest guidance on the process and key factors leading to designation. In addition for NBFCs that believe they may be vulnerable to a SIFI designation, we also describe steps that can be taken to assess the likelihood of designation and the types of information likely to be necessary to counter any such designation in the FSOC three-stage process.

This edition should be of particular interest to insurance companies, specialty lenders, hedge funds, asset managers and other NBFCs that may be concerned about being designated as a SIFI.

Contact us

Dan Ryan
Financial Services Advisory Leader
Tel: +1 (646) 471 8488
Email

Alison Gilmore
US Asset and Wealth Management Marketing Leader
Tel: +1 (646) 471 0588
Email

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