U.S. financial regulators are looking at specific non-bank financial companies to possibly designate them as systemically important and subject to more rigorous supervision, said Michael Gibson, director of the Division of Banking Supervision and Regulation at the Federal Reserve Board.
The Financial Stability Oversight Council issued a rule April 3 explaining the criteria it will use to designate non-bank financial firms as systemically important. Federal Reserve Chairman Ben S. Bernanke is a member of the council and U.S. Treasury Secretary Timothy Geithner chairs the panel.
“The Council and its member agencies’ staffs currently are using these criteria to analyze the potential systemic importance of individual non-bank financial companies in different industries,” Gibson said in prepared testimony to a House Financial Services subcommittee today.
Fed officials have stepped up their oversight of financial system risk following the 2008-2009 financial crisis. Once the panel, known as FSOC, designates a financial company as systemically important, the Dodd Frank Act entrusts the Fed with supervision of the institution.
“The Federal Reserve is committed to thoroughly assessing the business model, capital structure, and risk profile of each designated company,” Gibson told the subcommittee in the text of his remarks.
Gibson became division director on Jan. 1 this year, succeeding Patrick Parkinson. He did not mention JPMorgan Chase & Co.’s recent trading loss in the prepared text.