Below are recent activities on the FIO/FSOC front.
- In its quarterly report to Congress issued on July 24, 2013, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) details its support for the Financial Stability Oversight Council’s (FSOC’s) designation of AIG as a systemically important financial institution. Specifically, the report states that “Implementation of SIGTARP’s recommendation to designate AIG as systemically important is a necessary and positive step to repairing AIG’s lax regulatory environment that allowed for the company’s near-collapse, threatened financial stability, and contributed to the financial crisis and the taxpayers’ bailout of AIG. Subjecting AIG to the highest level of Federal regulation is necessary to mitigate the potential dangers to financial stability should AIG again find itself in severe financial distress.” o You can read the entire report here.
- A bipartisan group of Senators introduced legislation on July 25, 2013 to provide the Federal Reserve with additional flexibility to regulate systemically important insurance companies. Senators Sherrod Brown (D-OH), Mike Johanns (R-NE), Mark Kirk (R-IL), Jon Tester (D-MT), and Pat Toomey (R-PA) introduced S. 1369 which would permit the exclusion of insurers from certain bank capital rules. o You can read the bill here.
- On July 23, 2013, Prudential Financial Inc. met with FSOC to protest its proposed designation as systemically important. The Treasury Department confirmed that the meeting occurred but would not comment on specifics. FSOC has 60 days from the date of the hearing to make its final decision.