September 29, 2017

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FSOC Should Use Updated Risk Measures in Designating and Regulating Financial Service Companies as Systemically Important

Today’s decision reflects FSOC's consideration of updated business and risk model information as well as the important responsibility to protect consumers, taxpayers and the economy.

FSOC Should Use Updated Risk Measures in Designating and Regulating Financial Service Companies as Systemically Important
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FSOC Should Use Updated Risk Measures in Designating and Regulating Financial Service Companies as Systemically Important

 

WASHINGTON—Today’s decision by the Financial Stability Oversight Council (FSOC) to de-designate AIG as a systemically important financial institution (SIFI) reflects broad consensus that FSOC’s designation authority should focus on updated methods for more effectively and efficiently mitigating risks to taxpayers and the economy.

“Today’s decision reflects FSOC’s consideration of updated business and risk model information as well as the important responsibility to protect consumers, taxpayers and the economy,” said Tim Pawlenty, CEO of the Financial Services Roundtable (FSR).  “The FSOC should also use a similar approach to thoughtfully consider rescinding the SIFI designations of other non-banks.”

In determining regulatory standards and approaches, FSR supports using an activities-based approach that considers a variety of risk measures rather than solely asset size as the only measure of risk.  Congress should codify such an approach and also recognize differences in various types of financial institutions while also rescinding FSOC’s designation authority over non-banks.

 

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About The Author

The Financial Services Roundtable represents the largest integrated financial services companies providing banking, insurance, payment and investment products and services to the American consumer. Member companies participate through the Chief Executive Officer and other senior executives nominated by the CEO. FSR member companies provide fuel for America’s economic engine, accounting for $92.7 trillion in managed assets, $1.2 trillion in revenue, and 2.3 million jobs.

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