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Monday, May 12, 2014

Congress Requests Transparency in G-SIFI Designation

House Financial Services Committee chairman Jeb Hensarling, along with five other members of congress, wrote to the Federal Reserve, Treasury and SEC, asking for the Financial Stability Board (FSB) to make their method for designation of a globally systemically important financial institution (G-SIFI) more transparent and to inform congress of the “current state of these deliberations.” The members wrote:

Designation as a G-SIFI could have wide ranging and unpredictable consequences in terms of a company’s competitive position, cost-of-capital, regulatory treatment, and the expectation of government support in the event of its failure. It is therefore essential that we have sufficient information on this process to perform our legislative and oversight responsibilities.

Furthermore, the members shared three concerns: the lack of transparency and due process in the designation of firms as SIFIs or G-SIFIs, the types of firms that are being considered for designation and what the consequences of designation on individual companies, industries and the economy as a whole might be.

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