Systemic-risk designation readied for first U.S. non-banks

Financial Stability Oversight Council will request confidential data

$50 Billion

Bank-holding companies with more than $50 billion in assets -- including Bank of America Corp., JPMorgan Chase & Co., Morgan Stanley, Goldman Sachs Group Inc., Wells Fargo & Co. and Citigroup Inc. -- are automatically subject to heightened Fed supervision under Dodd-Frank. Non-banks designated systemically important would get Fed oversight similar to that of the large banks.

Prudential Financial Inc., the second-largest U.S. life insurer, has said it meets the council’s thresholds for further evaluation. Spokesman Bob DeFillippo said Prudential has been working with regulators and wants to make sure “they understand that we shouldn’t be pounded into a bank mold, that they look at us for the company that we are.”

GE Capital “has a strong capital position, solid earnings and a diversified funding base,” Spokesman Russell Wilkerson said. “We are prepared for whatever outcome the regulators may reach.”

Designation Likely

Mike Neal, GE Capital’s chief executive officer, said at an investor conference in May that the firm is likely to be designated.

“We have not been designated a SIFI as yet, but it’s likely,” he said.

MetLife Inc., the largest U.S. life insurer, has been regulated by the Fed because it owns a bank. The firm is seeking to exit banking to limit oversight, which has prevented New York-based MetLife from boosting its dividend or repurchasing shares.

“We do not believe regulated insurance activities pose systemic risk to the U.S. financial system,” MetLife CEO Steven Kandarian said on an Aug. 2 conference call with analysts. “In the event that certain insurance companies are named SIFIs, the impact is a matter of public debate.”

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