U.S. regulators will soon identify non-bank financial firms, that are to be considered systemically important, Fitch says
Fitch Ratings says that it expects U.S. regulators to soon identify firms, other than banks, that are to be considered systemically important; thereby facing additional regulatory measures.
The rating agency said Tuesday that the U.S. Financial Stability Oversight Council (FSOC) is expected to make a decision on naming non-bank financial institutions as systemically important financial institutions (SIFIs) in the “near term”.
It also says that it believes it’s doubtful that smaller insurers will be considered systemically important just because they are owned by large foreign parents; adding that the U.S. Federal Reserve Board is likely to clarify its position on foreign non-bank financial companies in the near future.
“Ultimately, we think it is unlikely that the [Fed] would want to commit resources to overseeing these foreign-owned insurance companies,” it says. “Further, the oversight of these companies could complicate cross-border regulation of global insurance organizations including U.S. companies with overseas operations.”
Fitch says that the industry trade group, the American Council of Life Insurers (ACLI), has asked the Fed to clarify its position on the proposed rule implementing enhanced prudential standards and early remediation requirements for foreign non-bank financials. And, it has criticized the application of a bank-centric approach to insurance regulation when it comes to SIFI designation.