Banks Must Not Let Up in Fight for Regulatory Balance
Nearly six years after passage of the Dodd-Frank, it is amazing how little has been achieved in figuring out the correct balance in financial regulation — one that keeps institutions in check without undermining their ability to do business.
A good example of what is still unresolved is the Financial Stability Oversight Council. With the recent rescission of GE Capital's "systematically important financial institution" status, and with MetLife's legal victory over its SIFI designation, the FSOC right now can count only two firms — AIG and Prudential — as squarely in the SIFI category. (The MetLife decision awaits an appellate court's review.)
No doubt that FSOC does not believe that two SIFI designations solve the systemic stability issues that Title I of Dodd-Frank intended to address. So whether in this administration or the next, FSOC will likely refine its approach and goals, which already includes attempts to impose greater prudential regulation on nonbanks such as asset managers and investment funds.