{"id":80800,"date":"2023-11-05T01:57:43","date_gmt":"2023-11-05T05:57:43","guid":{"rendered":"https:\/\/ifintechworld.com\/uncategorized\/us-regulators-agree-to-ramp-up-oversight-of-systemically-risky-non-banks\/"},"modified":"2023-11-05T01:57:48","modified_gmt":"2023-11-05T05:57:48","slug":"us-regulators-agree-to-ramp-up-oversight-of-systemically-risky-non-banks","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=80800","title":{"rendered":"US regulators agree to ramp up oversight of systemically risky non-banks"},"content":{"rendered":"<div>\n<div id=\"imgCarousel\" class=\"imgCarousel\">\n<p><span class=\"text\">\u00a9 Reuters. FILE PHOTO: A street sign for Wall Street is seen in the financial district in New York, U.S., November 8, 2021. REUTERS\/Brendan McDermid\/File Photo<\/span><br \/>\n<i class=\"imgGrad\"><\/i>\n<\/div>\n<p>By Pete Schroeder<\/p>\n<p>WASHINGTON (Reuters) -U.S. regulators on Friday cleared the way to increase oversight of asset managers, hedge funds and other non-banks that they believe pose risks to the financial system, reviving a tough new regime that had been sidelined under former President Donald Trump. <\/p>\n<p>The Financial Stability Oversight Council (FSOC), led by the Treasury Department and comprising other major agencies, also adopted a new framework for identifying looming risks in the financial system in an effort to make the council&#8217;s work more transparent.<\/p>\n<p>Both changes to the process for designating a non-bank as a &#8220;systemically important financial institution,&#8221; or SIFI, were proposed in April. <\/p>\n<p>Regulatory concerns are growing that more and more financial activity, including lending, is migrating to non-banks, which have less transparency, but the new approach was met with swift criticism from the financial industry.<\/p>\n<p>While FSOC has not named any potential non-bank SIFIs, it is expected to focus on major global asset managers and hedge funds, such as BlackRock (NYSE:) and Bridgewater, potentially subjecting them to U.S. Federal Reserve oversight and heightened capital and liquidity requirements.<\/p>\n<p>BlackRock and Bridgewater did not immediately provide any comment.<\/p>\n<p>Friday&#8217;s vote reversed a Trump administration policy that regulators should police risky activities rather than single out individual firms. In a statement on Friday, Treasury Secretary Janet Yellen said that approach was based on &#8220;a flawed view of how financial risks develop and spread,&#8221; but emphasized designating firms is one of several tools the panel can employ.<\/p>\n<p>Under the revamped process, FSOC will identify potential SIFIs based on existing information and give the company a chance to respond. If FSOC decides to proceed, the company would then discuss the matter with its primary regulator and the FSOC. It would only be designated if two-thirds of FSOC&#8217;s 10 members votes in favor. Designations will be reviewed annually.<\/p>\n<p>The new process drew criticism from Eric Pan, head of the Investment Company Institute, which represents global asset managers.<\/p>\n<p>&#8220;SIFI designation is a blunt tool that offers an outsized focus on individual companies rather than a holistic assessment of risk,&#8221; he said in a statement.<\/p>\n<p>Similarly, the Managed Funds Association, which represents hedge funds, said non-banks do not pose the same risks as banks. <\/p>\n<p>&#8220;The guidance imposes a black box designation process that introduces uncertainty for market participants,&#8221; said MFA President and CEO Bryan Corbett.<\/p>\n<p>FSOC&#8217;s designation of four non-banks under President Barack Obama faced intense industry opposition.<\/p>\n<p>MetLife (NYSE:), Inc successfully challenged its designation in court, and <span itemscope=\"\" itemtype=\"http:\/\/schema.org\/Corporation\"><span itemprop=\"name\"> General Electric <\/span><\/span> (NYSE:) Capital Corporation shed its designation in 2016 after drastically slimming down its business. The designations of American International Group (NYSE:), Inc and Prudential Financial (NYSE:), Inc were lifted by the Trump administration.<\/p>\n<p>&#8220;The change would make it easier than it is now to designate a non-bank as a SIFI, but it would be a long, deliberate process that we think would take at least a year from start to finish,&#8221; said Ian Katz, managing director of policy research firm Capital Alpha Partners.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.investing.com\/news\/economy\/us-financial-regulators-approve-process-to-revive-systemically-important-nonbank-oversight-3221970\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u00a9 Reuters. FILE PHOTO: A street sign for Wall Street is seen in the financial district in New York, U.S., November 8, 2021. REUTERS\/Brendan McDermid\/File Photo By Pete Schroeder WASHINGTON (Reuters) -U.S. regulators on Friday cleared the way to increase oversight of asset managers, hedge funds and other non-banks that they believe pose risks to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":651,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[1],"tags":[83],"class_list":["post-80800","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-uncategorized","tag-featured","post_format-post-format-video"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>US regulators agree to ramp up oversight of systemically risky non-banks | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u00a9 Reuters. 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