Another wonderful addition to the TBTF list – and we don’t even know haw many public companies are on the list or who they are!
This will be guaranteed to throw yet more money printing/asset fudging and sucking up productive funds to kick the can of break the bastards up and liquidate then when fail just a few more feet down the ditch of insolvency.
I hate it….
The number of too-big-to-fail institutions gets bigger
Jun 8th 2013 | New York |Courtesy of the Economist
ALTHOUGH the names on the list are supposed to be secret AIG and Prudential, two insurers, this week confirmed they are on it. So too did GE Capital, the conglomerate’s financial arm. These firms, and perhaps others, have joined America’s largest banks and clearinghouses in being designated “systemically important financial institutions” (SIFIs) by the new Financial Stability Oversight Council, a regulatory watchdog [ posters' note: Another committee the help us out]. What that means in practice is that because they are thought to be significant enough to blow up America’s economy, they should get special attention.
An appeals process against being labelled a SIFI will last for 30 days, but discussions have been going on for years so it is hard to believe minds will be swayed now. The immediate consequence is that the firms will be regulated by the Fed [ poster's note: Now this is going to be a great addition to the Fed's obnoxious powers, isn't it!]
and subjected to tougher capital and operational requirements. Jack Lew, the treasury secretary, said the designations would “protect taxpayers, reduce risk in the financial system, and promote financial stability.” [poster's note: Count on it doing the exact opposite.]
Others are less enthusiastic. “This is a catastrophe,” says Peter Wallison, a fellow of the American Enterprise Institute, a think-tank, and a former White House counsel. Putting these institutions under the thumb of the Fed will inevitably undermine their ability to innovate, he argues. And joining the group of entities perceived to be too big to fail means they will enjoy an implicit government guarantee. That will put them at a funding advantage against smaller companies, he says, and imply that their products are government-backed, a huge help for insurers in particular.
Firms themselves appear to have mixed feelings about the SIFI label. AIG seems to approve; MetLife, an insurer that has not been designated, thinks that the higher capital requirements it brings could undermine the viability of some products. Much depends on whether SIFIs are now perceived to have an implicit guarantee, and on whether that can be monitised. It also matters how many other firms are designated SIFIs. Lots of financial firms in America are large: there are rumblings about money-market funds, asset managers and private-equity firms. Risk can move around the financial system. The question today is which firms should be on the list. Eventually it might be which to leave off.