On September 28, the Financial Stability Oversight Counsel ("FSOC") voted to notify a yet publically unnamed group of nonbanking financial companies that FSOC is considering naming them systemically important.

In April 2012, FSOC finalized rules by which it would designate nonbank financial companies as systemically important. The rule sets forth a three stage process for designating nonbank financial companies as such. The initial identification of possible systemically important nonbank financial companies occurs in stage one. Stage two of the designation process requires FSOC to analyze the nonbank financial companies identified in stage one using a broad range of information obtained through existing public and regulatory sources. In stage three, FSOC contacts the nonbank financial companies and informs them that they are being considered for designation as systemically important. FSOC will then request information that was not available to it during the prior two stages of the process. Presumably, FSOC is currently at stage three with the companies it voted to notify on September 28.

After stage three is complete, FSOC can designate a nonbank financial company systemically important by a two-thirds vote of its voting members, including a mandatory affirmative vote by the FSOC chairperson. The company so designated can then request a hearing to contest the designation. Following the hearing, FSOC must again vote to designate the firm a SIFI by a two-thirds majority, including the affirmative vote by the chairperson.

The names of the systemically important companies will not be revealed to the public until after FSOC has made its final determination. There has been much debate over what effect the designation of systemically important will have on a company. The September 28 vote by FSOC is a significant step toward moving the debate from the theoretical to the concrete.