FSOC Discusses Non-Bank Financial Company Designation Process (with Delta Strategy Group Summary and Lofchie Comment)

The Senate Banking Subcommittee on Securities, Insurance and Investment held a hearing to discuss oversight of the FSOC process for designating firms as systemically significant. According to the Delta Strategy summary linked below, FSOC Deputy Assistant Secretary Patrick Pinschmidt said that (i) FSOC is still considering entity and activity-based designations for asset management firms and (ii) insurance company designations are based on a firm's size and interconnectedness, and on operations that are not considered "plain vanilla" insurance activities.

Lofchie Comment: FSOC continues to threaten to designate investment advisers as being systemically significant. For FSOC to consider this possibility means that it believes it should have the authority to regulate investment decisions made by wholly private enterprises on the basis of decisions that it considers to be "too risky." That would be a substantial and unprecedented exercise of power by the U.S. government.

Click here to view a summary by the Delta Strategy Group.

See: Written Statement of Deputy Assistant Secretary Patrick Pinschmidt.