Fed Lists 15 Firms to Get Extra Scrutiny at Special Unit

The Federal Reserve released a list of 15 firms that merit an extra layer of supervision because they pose heightened systemic risks, including JPMorgan Chase & Co. and Bank of America Corp.

The tally published on the Fed’s website today listed the four largest U.S. lenders, the biggest clearing and custody banks such as Bank of New York Mellon Corp., and Wall Street firms Goldman Sachs Group Inc. and Morgan Stanley. (MS) Other members are insurer American International Group Inc., the General Electric Capital Corp. and four of Europe’s largest financial companies.

The firms “may pose elevated risks to U.S. financial stability,” the central bank said. They’ll be examined by the Large Institution Supervision Coordinating Committee, a cross-disciplinary unit of economists, supervisors, lawyers and payment systems experts looking for trends and risks shared across these firms.

The LISCC, which Fed staff members pronounce “Lis-sick,” was organized by Fed governor Daniel Tarullo and former Chairman Ben S. Bernanke. The goal is to strengthen oversight of large banks “to reduce the probability of, and cost associated with, their material financial distress or failure,” the Fed said.

Additional U.S. firms in the group are Citigroup Inc. (C), Wells Fargo & Co., State Street Corp. and Prudential Financial Inc. Foreign-based lenders include Barclays Plc, Credit Suisse Group AG (CSGN), Deutsche Bank AG (DBK) and UBS AG. (UBSN)

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net; Chris Wellisz at cwellisz@bloomberg.net Rick Green, Steven Crabill

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.